🔗 Share this article

Russia's monetary authority has stated it is pursuing damages totaling $230 billion against the financial institution Euroclear. This action represents a clear response by the Kremlin regarding plans to use immobilized Russian state assets to support Ukraine.

The Substantial Demand

Based on accounts in local state media, the monetary authority initiated a claim last week for roughly 18 trillion roubles. This sum corresponds to the stated $230 billion claim.

European Union officials will decide in the coming days on a plan to use approximately €210 billion in frozen Russian assets. The proposal entails providing Ukraine with a substantial loan to fund its military and financial needs.

The vast majority of these assets, amounting to €185 billion, are stored at the Euroclear depository in Brussels. This institution serves as the main custodian for the Russian immobilised sovereign wealth.

Dispute on Ownership

European Union officials have maintained that their proposal is on solid legal ground. They argue is based on the fact that ownership of the sovereign wealth remains with Russia, even though it was frozen in EU countries shortly after the 2022 invasion of Ukraine.

The Russian government, in contrast, has called any utilization of the assets as illegal appropriation. It has warned of reciprocal measures, such as confiscating EU private investors' holdings within Russia.

Kirill Dmitriev, a figure who has taken on a key position in peace negotiations, wrote on X that Russia "will win in court" and regain its assets. He added that the European Union, the common currency, and Euroclear "will face consequences" from the proposal.

Wider Implications

In comments seen as an effort to drive a wedge between Europe and the United States, the official described the proposal as "a severe attack on property rights and the international reserves system created by the United States."

The clearing house refused to comment on the latest lawsuit. The institution has previously noted it is facing more than 100 lawsuits in Russian jurisdictions.

Legal Hurdles Ahead

While judges in EU countries are unlikely to recognize judgments from Russian courts, analysts expect Moscow to pursue enforcement in nations with closer ties to the Kremlin.

"The Bank of Russia may attempt to enforce a Russian court's decision against Euroclear in countries such as China, Hong Kong, the UAE, Kazakhstan, and other friendly nations, provided that relevant holdings can be identified," stated a lawyer from an international firm.

EU Countermeasures

EU officials said they are working on steps to discourage other nations from assisting any Russian legal action against European companies. Additionally, they are designing safeguards to shield EU member states with investments in Russia from what they term "illegal expropriation."

The Proposed Loan Mechanism

According to the detailed plan, the EU would issue an initial €90 billion loan to Ukraine, backed by the cash generated from the immobilized assets at Euroclear. Critically, Russia's legal claim on the underlying funds would remain untouched.

Kyiv would solely be obligated to repay the money if and when Russia consented to pay compensation for the immense damage inflicted during the ongoing war.

Alternative Proposals

The Belgian government, backed by Italy, Bulgaria, and Malta, has asked the EU to consider an different method for financing Ukraine. This involves common EU debt issuance to secure a loan, backed by unused funds within the EU budget.

This alternative move, nevertheless, requires unanimity among all 27 EU countries. Hungary's government, considered aligned with the Kremlin, has already expressed its objection.

Commenting on Monday, the EU foreign policy chief, Kaja Kallas, described the proposed loan scheme as "the strongest option" for supporting Ukraine. "The reparations loan is based on the Russian immobilized funds, meaning it doesn't come from our public funds, which is equally significant," she stated. "Furthermore, it sends a powerful message that if you cause all this destruction to another nation, you must pay for the rebuilding."