EU backs indefinite freeze of frozen Russian cash ahead of big Ukraine loan plan

European Union governments have agreed to indefinitely freeze Russian assets worth up to €210bn (£185bn) that have been frozen in the EU since the start of Russia’s large-scale invasion of Ukraine.

Most of Moscow’s cash is held in Belgian bank Euroclear, and European leaders hope to reach a deal at next week’s crucial EU summit that would use the money for a loan that would help kyiv finance its military and economy.

After almost four years of Russia’s full-scale war, Ukraine is running out of cash and needs approximately €135.7bn (£119bn; $159bn) over the next two years.

Europe aims to provide two-thirds of that amount, but Russian officials accuse the EU of theft.

The Russian Central Bank said on Friday it was suing Belgian bank Euroclear in a Moscow court in response to the EU loan plan.

Russia’s assets in the EU were frozen within days of the full-scale invasion of Ukraine in February 2022, and Euroclear owns €185 billion of them.

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

“It is only fair that Russia’s frozen assets be used to rebuild what Russia has destroyed, and then that money becomes ours,” says Ukraine’s Volodymyr Zelensky.

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

Legal action from Russia was expected in Brussels and European Economic Commissioner Valdis Dombrovskis said on Friday that EU financial institutions were “totally protected” from legal proceedings.

But it is not only Moscow that is dissatisfied.

Belgium is worried about having to pay a huge bill if everything goes wrong and Euroclear chief executive Valérie Urbain says using it could “destabilize the international financial system”.

Euroclear also has between 16 and 17 billion euros tied up in Russia.

Belgian Prime Minister Bart De Wever has set the EU a series of “rational, reasonable and justified conditions” before accepting the reparations plan, and has refused to rule out legal action if it “presents significant risks” for his country.

The EU is working until the last moment before next Thursday’s summit to find a solution that Belgium can accept.

The EU has so far avoided directly touching the assets, but since last year it has paid “windfall profits” from them to Ukraine. In 2024, that figure would rise to 3.7 billion euros. Legal use of the interest is considered safe since Russia is under sanctions and the profits are not Russian sovereign property.

But international military aid to Ukraine has declined sharply in 2025, and Europe has struggled to make up the shortfall left by the United States’ decision to virtually stop funding Ukraine under President Donald Trump.

There are currently two EU proposals aimed at providing Ukraine with €90 billion to cover two-thirds of its financing needs.

One is to raise money on the capital markets, backed by the EU budget as collateral. This is Belgium’s preferred option, but it requires a unanimous vote from EU leaders and that would be difficult when Hungary and Slovakia oppose funding Ukraine’s military.

That leaves Ukraine lending cash from Russian assets, which were originally held in securities but have now largely matured into cash. That money is property of Euroclear held at the European Central Bank.

The EU executive, the European Commission, accepts that Belgium has legitimate concerns and says it is confident it has resolved them.

The plan is to protect Belgium with a guarantee covering €210 billion of Russian assets in the EU.

If Euroclear suffered a loss on its own assets in Russia, a Commission source explained that this would be offset by assets belonging to the Russian clearinghouse itself which are located in the EU.

If Russia were to go after Belgium itself, any ruling by a Russian court would not be recognized in the EU.

In a key development, EU ambassadors agreed that Russia’s central bank’s assets in Europe should be frozen indefinitely.

Until now they had to vote unanimously every six months to renew the freeze, which could have meant a repeated risk for Belgium.

EU ambassadors used an emergency clause under Article 122 of the EU Treaties for assets to remain frozen as long as an “immediate threat to the economic interests of the union” continues, or until Russia pays war reparations to Ukraine in full.

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

In this case, a generally divided political landscape has united behind Prime Minister Bart De Wever, who is under pressure from his European colleagues.

The EU will make “very important decisions” next week, he said during a meeting with UK Prime Minister Sir Keir Starmer in London on Friday. He added that Belgium and the United Kingdom would work together to “gain certainty that we can help Ukraine to remain a free, democratic and sovereign country.”

The EU believes it can obtain sufficient guarantees for the loan, but Belgium fears an additional risk of being exposed to additional damages or sanctions.

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

It also believes that the requirement that Euroclear provide a loan to the EU would violate EU banking regulations.

“Banks must meet capital and liquidity requirements and should not put all their eggs in one basket. Now the EU is asking Euroclear to do just that.

“Why do we have these banking rules? It’s because we want the banks to be stable. And if things go wrong, it would be up to Belgium to bail out Euroclear. That’s another reason why it’s so important for Belgium to secure irrefutable guarantees for Euroclear.”

There is no time to waste, warn seven EU member states, including those closest geographically to Russia, such as the Baltic countries, Finland and Poland. They consider that the asset freezing plan is “the most financially viable and politically realistic solution.”

“For us it is a question of destiny,” says prominent German conservative MP Norbert Röttgen. “If we fail, I don’t know what we will do next. That’s why we have to succeed within a week.”

While Russia insists its money should not be touched, there are additional concerns among European figures that the United States wants to use Russia’s frozen billions differently, as part of its own peace plan.

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

An early draft of the US peace plan referred to $100 billion of Russia’s frozen assets being used by the US for reconstruction, with the US taking 50% of the profits and Europe adding another $100 billion. The remaining assets would then be used in some type of joint investment project between the United States and Russia.

An EU source said the added bonus of Friday’s expected vote to tie up Russia’s assets indefinitely made it harder for anyone to take the money. It is implied that the United States would then have to win over a majority of EU member states to vote for a plan that would cost them an enormous sum financially.