Kyiv remains running out of financial resources to maintain its armed forces and economy afloat, after close to 48 months of the ongoing invasion by Moscow.
From the EU's perspective, the remedy to filling Kyiv's budget hole of €135.7bn for the next two years rests with Moscow's immobilized funds sitting in Belgian bank Euroclear, and Brussels hope to sign that off at their meeting in Brussels next week.
Russian officials warn the EU plan would be an act of theft, and Russia's central bank declared on Friday it was taking to court Euroclear in a Moscow court ahead of a final decision is made.
'Only Fair' to Use Moscow's Funds, Say Kyiv and Brussels
All told, Russia has approximately €210bn of its state reserves immobilized in the EU, and €185bn of that is managed by Euroclear.
The EU and Ukraine argue that money should be used to rebuild what Russia has devastated: EU officials calls it a "reconstruction loan" and has devised a plan to support Ukraine's economy valued at €90bn.
"It is only just that Russia's frozen assets should be used to reconstruct what Russia has destroyed – and that money then becomes ours," states Ukrainian President Volodymyr Zelensky.
German Chancellor Friedrich Merz argues the assets will "help Ukraine to protect itself successfully against subsequent Russian attacks".
The legal move by Moscow was anticipated in Brussels. But it is not just Moscow that is dissatisfied.
Authorities in Brussels is worried it will be left with an enormous bill if it all backfires, and Euroclear CEO Valérie Urbain warns using the assets could "destabilise the international financial system".
Euroclear also has an roughly €16-17bn locked in Russia.
The leader of Belgium Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will agree to the reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.
The Details of the EU's Proposal?
Brussels is racing against time ahead of next Thursday's summit to agree on a solution that Belgium can support.
Previously the EU has refrained from touching the principal funds directly but starting in 2024 has directed the "extraordinary revenues" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the interest is considered permissible as Russia is sanctioned and the returns are not Russian sovereign property.
But international military aid for Ukraine has fallen significantly in 2025, and Europe has struggled to make up the deficit caused by the US decision to all but stop funding Ukraine under President Donald Trump.
There are currently two EU options aimed at providing Ukraine with €90bn, to cover a large portion of its financial requirements.
- Option one is to borrow the funds on the markets, secured against the EU budget as a guarantee. This is Belgium's first choice but it requires a consensus by EU leaders and that would be challenging when Hungary and Slovakia are against funding Ukraine's military.
- The alternative is providing a loan of Ukraine cash from the Moscow's immobilized capital, which were initially held in securities but have now largely matured into cash. That money is owned by Euroclear deposited at the European Central Bank.
The European Commission accepts Belgium has justified fears and states it is convinced it has addressed them.
The scheme is for Belgium to be shielded with a guarantee covering all the €210bn of Russian assets in the EU.
If Euroclear suffer a loss of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own clearing house which are in the EU.
Should Russia targeted Belgium itself, any judgment by a Russian court would not be enforced in the EU.
In a key development, EU ambassadors are poised to endorse on Friday to permanently block Russia's central bank assets held in Europe permanently.
Heretofore they have had to vote by consensus every six months to continue the freeze, which could have meant a ongoing risk to Belgium.
The EU ambassadors are set to use an special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "direct danger to the economic interests of the union" continues.
Why Belgium is Still Not Convinced
The Belgian government is insistent it remains a committed partner of Ukraine, but sees regulatory pitfalls in the plan and is concerned about being left to handle the fallout if things fail.
A normally divided political landscape in this case has rallied behind Prime Minister Bart de Wever, who is under pressure from European colleagues.
"Belgium is a small economy. Belgian GDP is around €565bn – consider if it would need to bear a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.
While the EU might be able to arrange enough assurances for the loan itself, Belgium is concerned about an added risk of being subject to extra fines or liabilities.
Prof Colaert also believes the requirement for Euroclear to grant a loan to the EU would contravene EU banking regulations.
"Lenders need to follow capital and liquidity requirements and shouldn't concentrate risk. Now the EU is instructing Euroclear to do exactly that.
"Why do we have these banking laws? It's because we want banks to be solvent. And if things turn sour it would fall to Belgium to bail out Euroclear. That's a further cause why it's so crucial for Belgium to obtain absolute assurances for Euroclear."
The European Union In a Difficult Position from All Sides
Time is of the essence, caution several EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the economically realistic and practically possible solution".
"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "Should we not succeed, I don't know what we'll do afterwards. That's why we have to finalize the deal in a week's time".
While Russia is unyielding its money should not be accessed, there are additional apprehensions among European figures that the US may want to employ Russia's frozen billions differently, as part of its own diplomatic proposal.
Zelensky has stated Ukraine is working with Europe and the US on a recovery fund, but he is also cognizant the US has been talking to Russia about possible partnership.
A preliminary version of the US peace plan suggested $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving
