Kyiv remains running out of funding to sustain its armed forces and economy afloat, after nearly four years of Russia's full-scale war.
From the EU's perspective, the answer to filling Kyiv's financial shortfall of €135.7bn for the coming 24 months is found in frozen Russian assets sitting in Belgian bank Euroclear, and EU leaders seek to finalize the plan at their EU leaders' conference next week.
Russian officials warn the EU plan would be an act of theft, and Russia's central bank stated on Friday it was taking to court Euroclear in a Moscow court even before a final decision is made.
'Appropriate' to Employ Russia's Funds, Say European and Ukrainian Officials
Overall, Russia has approximately €210bn of its state reserves blocked in the EU, and €185bn of that is managed by Euroclear.
European and Ukrainian authorities argue that those funds should be used to reconstruct what Russia has laid waste to: EU officials refers to it as a "loan for reparations" and has devised a plan to bolster Ukraine's economy amounting to €90bn.
"It is appropriate that Russia's frozen assets should be used to rebuild what Russia has destroyed – and that those funds then becomes ours," says Ukraine's Volodymyr Zelensky.
German Chancellor Friedrich Merz says the assets will "help Ukraine to protect itself efficiently against subsequent Russian attacks".
Russia's court action was foreseen in Brussels. But it is not just Moscow that is concerned.
The Belgian government is worried it will be left with an huge bill if it all fails, and Euroclear head Valérie Urbain says using the assets could "undermine the world's financial order".
Euroclear also has an estimated €16-17bn frozen in Russia.
Belgium's PM Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will accept the reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.
Explaining the EU's Plan?
Brussels is working to the wire ahead of next Thursday's summit to finalize a arrangement that Belgium can agree to.
So far the EU has avoided using the assets themselves directly but since last year has transferred the "excess income" from them to Ukraine. In 2024 that amounted to €3.7bn. Juridically, using the interest is deemed less risky as Russia is sanctioned and the earnings are not Moscow's sovereign assets.
But international military aid for Ukraine has slipped dramatically in 2025, and Europe has had trouble trying to compensate for the gap caused by the US decision to all but stop funding Ukraine under President Donald Trump.
There are at the moment two EU plans aimed at supplying Ukraine with €90bn, to cover two-thirds of its financial requirements.
- Option one is to secure the capital on financial markets, secured against the EU budget as a guarantee. This is Belgium's first choice but it needs a agreement by all by EU leaders and that would be problematic when Hungary and Slovakia oppose funding Ukraine's military.
- This makes the other option lending Ukraine cash from the frozen Russian funds, which were at first held in bonds but have now mostly turned into cash. That capital is Euroclear property deposited at the European Central Bank.
The European Commission recognizes Belgium has legitimate concerns and states it is confident it has dealt with them.
The proposal is for Belgium to be safeguarded with a assurance encompassing all the €210bn of Russian assets in the EU.
If Euroclear suffer a loss of its own assets in Russia, the loss would be compensated from assets belonging to Russia's own settlement agency which are in the EU.
Should Russia targeted Belgium itself, any decision by a Russian court would not be recognized in the EU.
In a significant move, EU ambassadors are expected to agree on Friday to permanently block Russia's central bank assets held in Europe indefinitely.
Heretofore they have had to vote all together every six months to continue the freeze, which could have meant a repeated risk to Belgium.
The EU ambassadors are planning to use an emergency clause under Article 122 of the EU Treaties so the assets remain frozen as long as an "immediate threat to the economic interests of the union" continues.
The Reasons Belgium is Not Yet Satisfied
The Belgian government is adamant it remains a strong supporter of Ukraine, but perceives regulatory pitfalls in the plan and is concerned about being shouldering the consequences if things fail.
A typically fractured political scene in this case has come together in support of Prime Minister Bart de Wever, who is being pressured from European colleagues.
"The Belgian economy is not large. Belgian GDP is around €565bn – consider if it would need to carry a €185bn bill," notes Veerle Colaert, academic specializing in financial regulation at KU Leuven University.
While the EU might be able to obtain sufficient assurances for the loan itself, Belgium is concerned about an added risk of being vulnerable to extra damages or penalties.
Prof Colaert also contends the stipulation for Euroclear to issue credit to the EU would violate EU banking regulations.
"Financial institutions need to adhere to capital and liquidity requirements and shouldn't make one enormous loan. Now the EU is instructing Euroclear to do just that.
"What is the purpose of these banking laws? It's because we want banks to be stable. And if things turn sour it would become the responsibility of Belgium to rescue Euroclear. That's a further cause why it's so vital for Belgium to obtain absolute guarantees for Euroclear."
EU Leaders Under Pressure from All Sides
Time is of the essence, caution a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They believe the frozen assets plan is "the most fiscally viable and practically possible solution".
"It is a decisive moment for us," says 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 used, there are further worries among European figures that the US may want to use Russia's blocked funds differently, as part of its own peace plan.
Zelensky has indicated Ukraine is working with Europe and the US on a reconstruction fund, but he is also mindful the US has been talking to Russia about potential collaboration.
An initial document of the US peace plan referred to $100bn of Russia's blocked funds being used by the US for reconstruction, with the US {taking|receiving
