Russia hits back at Europe’s big plan to loan Moscow’s frozen cash to Ukraine

Russia is taking legal action in response to moves by Ukraine’s European allies to use Moscow’s frozen assets to help Kiev finance its military and economy.

The Central Bank of Russia is suing the Belgian bank Euroclear in a Moscow court, and Russian officials accuse the EU of theft.

After nearly four years of Russia’s full-scale war, Ukraine is running out of cash.

For Europe, the solution to plugging Kiev’s €135.7bn (£119bn; $159bn) budget deficit over the next two years lies in the frozen cash held by Euroclear, which EU leaders hope to seal off at a summit in Brussels next week.

In total, around €210 billion of Russia’s assets in the EU were frozen a few days after the full-scale invasion of Ukraine in February 2022, of which €185 billion is held by Euroclear.

The EU and Ukraine argue that the money should be used to rebuild what Russia destroyed: Brussels calls it a “reparations loan” and has drawn up a plan to boost Ukraine’s economy to 90 billion euros.

“It is fair that Russia’s frozen assets are used to rebuild what Russia destroyed, and then this money becomes ours,” says Ukrainian Volodymyr Zelensky.

German Chancellor Friedrich Merz said the assets “will enable Ukraine to effectively protect itself against future Russian attacks.”

Russia’s court decision It was expected in Brussels and European Economic Commissioner Valdis Dombrovskis said on Friday that EU financial institutions were “fully protected” against legal action.

But it’s not just Moscow that’s unhappy.

Belgium is worried it could face a huge bill if everything goes wrong, and Euroclear CEO Valérie Urbain says using it could “destabilize the international financial system.”

It is also stated that Euroclear keeps an estimated 16-17 billion Euros inactive in Russia.

Belgian Prime Minister Bart de Wever set out a set of “rational, reasonable and justified conditions” for the EU before agreeing to the compensation plan, and refused to rule out legal action if it “poses significant risks” to his country.

The EU is trying to reach out ahead of next Thursday’s summit to find a solution acceptable to Belgium.

The EU has so far avoided touching the assets directly, but has paid Ukraine “windfall profits” from them since last year. In 2024, this figure was 3.7 billion Euros. Since Russia is under sanctions and the revenues are not the sovereign property of Russia, it is considered safe to use the interest legally.

But international military aid to Ukraine decreased significantly in 2025, and Europe struggled to fill the gap left by the U.S. decision to almost completely halt funding to Ukraine under President Donald Trump.

There are currently two EU proposals aiming to provide Ukraine with €90 billion to cover two-thirds of its funding needs.

One of these is to raise money from capital markets, backed by the guarantee of the EU budget. This is Belgium’s preferred option, but EU leaders need to decide unanimously, and that will be difficult when Hungary and Slovakia object to funding the Ukrainian military.

What remains is a cash loan to Ukraine from Russian assets that were originally held in securities but have now largely converted into cash. This money is Euroclear property held at the European Central Bank.

The European Commission, the EU’s executive body, acknowledges that Belgium has legitimate concerns and says it is confident it is addressing them.

The plan envisages protecting Belgium with a guarantee covering the entire 210 billion euros of Russian assets in the EU.

If Euroclear loses its own assets in Russia, a Commission source explained, this will be offset against assets belonging to Russia’s own clearinghouse in the EU.

If Russia goes after Belgium, any decision made by the Russian court will not be recognized in the EU.

In a major development, EU ambassadors are expected to agree on Friday to immobilize Russia’s central bank assets held in Europe indefinitely.

Until now, they had to vote unanimously every six months to renew the ice cream, which could mean a recurring risk for Belgium.

EU ambassadors are preparing to use an emergency clause under Article 122 of the EU Treaties to freeze assets for as long as an “immediate threat to the union’s economic interests” remains.

Belgium is determined to remain a staunch ally of Ukraine, but it sees legal risks in the plan and fears having to bear the repercussions if things go wrong.

In this case, an often divided political environment rallied behind Prime Minister Bart de Wever, who was under pressure from his European colleagues.

In a meeting with British Prime Minister Sir Keir Starmer in London on Friday, he said the EU would make “very important decisions” next week. He added that he, Belgium and the UK would work together to “make sure we can support Ukraine remaining a free, democratic and sovereign country”.

The EU believes it can provide adequate guarantees for the loan, but Belgium fears the risk of additional losses or penalties.

“Belgium is a small economy. Belgium’s GDP is around €565 billion; imagine if it had to shoulder a bill of €185 billion,” says Veerle Colaert, professor of financial law at KU Leuven University.

He also believes that Euroclear’s obligation to lend to the EU would violate EU banking regulations.

“Banks need to comply with capital and liquidity requirements and not put all their eggs in one basket. Now the EU is telling Euroclear to do just that.

“Why do we have these banking rules? Because we want the banks to be stable. And if things go wrong, it’s up to Belgium to bail out Euroclear. This is another reason why it’s so important for Belgium to get watertight guarantees for Euroclear.”

To warn the seven EU member states, including the countries geographically closest to Russia, such as the Baltic states, Finland and Poland, there is no time to waste. They believe the frozen assets plan is “the most financially feasible and politically realistic solution.”

“This is a matter of fate for us,” says leading German conservative MP Norbert Röttgen. “If we fail, I don’t know what we’ll do next. That’s why we need to succeed within a week.”

Although Russia insists its money remains untouched, there are also concerns among European figures that the United States may want to use Russia’s frozen billions differently as part of its own peace plan.

Zelensky said he was working with Europe and the United States on Ukraine’s reconstruction fund, but he is also aware that the United States is talking to Russia about future cooperation.

The first draft of the US peace plan mentioned that $100 billion of Russia’s frozen assets were used by the US for reconstruction, with the US receiving 50% of the profits and Europe adding another $100 billion. The remaining assets will then be used in some type of US-Russia joint investment project.

An EU source said Friday’s expected vote had the added benefit of immobilizing Russia’s assets indefinitely, making it harder for anyone to get the money. The implication is that the US would then have to win a majority of EU member states to vote for a plan that would cost them a huge amount financially.