Ukraine is depleting its funding to sustain its military and economy, after almost four years of the ongoing invasion by Moscow.
In the view of European leaders, the remedy to addressing Kyiv's financial shortfall of €135.7bn for the next two years lies in frozen Russian assets held by Belgian bank Euroclear, and EU leaders seek to sign that off at their meeting in Brussels next week.
Authorities in Russia warn the EU plan would be an illegal seizure, and Russia's central bank declared on Friday it was suing Euroclear in a Moscow court even before a definitive agreement is made.
'Only Fair' to Use Moscow's Funds, Assert European and Ukrainian Officials
Overall, Russia has approximately €210bn of its funds frozen in the EU, and €185bn of that is in the custody of Euroclear.
European and Ukrainian authorities argue that that capital should be used to restore what Russia has laid waste to: EU officials calls it a "loan for reparations" and has come up with a plan to support Ukraine's economy valued at €90bn.
"It's only fair that Russia's frozen assets should be used to reconstruct what Russia has devastated – and that those funds then becomes ours," says Ukrainian President Volodymyr Zelensky.
Germany's leader Friedrich Merz says the assets will "help Ukraine to shield itself successfully against any future Russian attacks".
Moscow's lawsuit was anticipated in Brussels. But it is not just Moscow that is dissatisfied.
The Belgian government is worried it will be burdened by an enormous bill if it all goes wrong, and Euroclear CEO Valérie Urbain argues using the assets could "disrupt the international financial system".
Euroclear also has an roughly €16-17bn immobilised in Russia.
Belgium's PM Bart de Wever has set the EU a series of "rational, reasonable, and justified conditions" before he will agree to the reparations plan, and he has left open the possibility of legal action if it "carries significant risks" for his country.
What is the EU's Strategy?
The EU is under pressure before next Thursday's summit to come up with a arrangement that Belgium can agree to.
So far the EU has refrained from using the principal funds directly but starting in 2024 has transferred the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the revenue is seen as less risky as Russia is under sanction and the returns are not Moscow's sovereign assets.
But foreign defense assistance for Ukraine has declined sharply in 2025, and Europe has struggled to compensate for the shortfall resulting from the US decision to all but stop funding Ukraine under President Donald Trump.
There are at the moment two EU plans designed to providing Ukraine with €90bn, to cover a large portion of its budgetary necessities.
- Option one is to secure the capital on the markets, secured against the EU budget as a guarantee. This is Belgium's preferred option but it requires a unanimous vote by EU leaders and that would be difficult when Hungary and Slovakia oppose funding Ukraine's military.
- The alternative is loaning Ukraine cash from the frozen Russian funds, which were initially held in bonds but have now largely been converted into cash. That funding is owned by Euroclear deposited at the European Central Bank.
The EU's executive accepts Belgium has justified fears and says it is convinced it has dealt with them.
The plan is for Belgium to be shielded with a assurance encompassing all the €210bn of Russian assets in the EU.
Should Euroclear suffer a loss of its own assets in Russia, the shortfall would be covered from assets belonging to Russia's own settlement agency which are in the EU.
In the event that Russia took legal action against Belgium itself, any ruling by a Russian court would not be enforced in the EU.
In a key development, EU ambassadors are expected to agree on Friday to freeze indefinitely Russia's central bank assets held in Europe for the foreseeable future.
Heretofore they have had to vote unanimously every six months to extend the freeze, which could have meant a ongoing risk to Belgium.
The EU ambassadors are expected to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "direct danger to the economic interests of the union" continues.
Why Belgium is Still Not On Board
The Belgian government is insistent it remains a strong supporter of Ukraine, but identifies juridical dangers in the plan and is concerned about being left to handle the repercussions if things do not work out.
A normally partisan political environment 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 about €565bn – imagine if it would need to shoulder a €185bn bill," says Veerle Colaert, professor of financial law at KU Leuven University.
While the EU might be able to obtain sufficient guarantees for the loan itself, Belgium worries about an further exposure of being exposed to extra damages or penalties.
Prof Colaert also contends the stipulation for Euroclear to provide a loan to the EU would contravene EU banking regulations.
"Financial institutions need to follow stability regulations and shouldn't put all their eggs in one basket. Now the EU is telling Euroclear to do precisely that.
"What is the purpose of these financial regulations? It's because we want banks to be stable. And if things go wrong it would be up to Belgium to save Euroclear. That's a further cause why it's so vital for Belgium to obtain ironclad protections for Euroclear."
EU Leaders Facing Strain from Multiple Fronts
The situation is urgent, caution seven EU member states including those closest to Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "a fiscally viable and practically possible solution".
"This is a crucial test for us," states leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do afterwards. That's why we have to reach an agreement in a week's time".
While Russia is unyielding its money should not be accessed, there are added concerns among leaders in Europe that the US may want to employ Russia's blocked funds differently, as part of its own peace initiative.
Zelensky has indicated Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also cognizant the US has been engaging with Russia about future co-operation.
An initial document of the US peace plan suggested $100bn of Russia's frozen assets being used by the US for reconstruction, with the US {taking|receiving
