🔗 Share this article

The Russian central bank has announced it is pursuing compensation valued at $230 billion against the securities depository Euroclear. This action constitutes a direct response by the Kremlin against plans to use immobilized Russian state assets to support Ukraine.

The Financial Lawsuit

Based on reports in Russian state media, the central bank filed a claim last week for an estimated 18 trillion roubles. This figure corresponds to the aforementioned $230 billion demand.

EU leaders are set to determine in the coming days on a proposal to use approximately €210 billion in frozen Russian state funds. This scheme involves granting Ukraine with a substantial loan to finance its military and financial needs.

Most of these assets, totaling €185 billion, reside at the Euroclear clearing house in Brussels. This institution acts as the primary custodian for the Kremlin's immobilised sovereign wealth.

Divergent Legal Views

EU authorities have argued that their plan is on solid legal ground. They argue is based on the fact that title of the sovereign wealth still belongs to Russia, even though it was immobilized in European jurisdictions shortly after the 2022 invasion of Ukraine.

Moscow, however, has labeled any utilization of the assets as illegal appropriation. It has warned of reciprocal measures, including confiscating EU corporate assets within Russia.

Kirill Dmitriev, a figure who has assumed a key position in peace negotiations, stated on X that Russia "will win in court" and regain its funds. He added that the European Union, the euro, and Euroclear "will suffer" from the plan.

Geopolitical Maneuvering

In comments interpreted as an effort to drive a wedge between Europe and the United States, the official characterized the assets plan as "a vicious attack on the right to ownership and the global financial system created by the United States."

Euroclear declined to comment on the new lawsuit. The institution has previously noted it is contending with more than 100 legal cases in Russian courts.

Enforcement Challenges

Although courts in EU countries are not expected to recognize judgments from Russian courts, analysts expect Moscow to seek implementation in countries with stronger ties to the Kremlin.

"Russian monetary authorities could try to implement a Russian court's decision against Euroclear in jurisdictions like China, Hong Kong, the UAE, Kazakhstan, and other friendly nations, if such holdings can be located," commented a legal expert from an international firm.

European Safeguards

European authorities said they are working on steps to discourage other nations from assisting any Russian lawsuits against European entities. Additionally, they are crafting protections to shield EU countries with assets in Russia from what they call "unlawful expropriation."

How the Funding Would Work

According to the complex plan, the EU would issue an first €90 billion loan to Ukraine, using the cash generated from the immobilized assets at Euroclear. Critically, Russia's legal claim on the underlying funds would stay unaffected.

Ukraine would only be required to return the money if and when Russia consented to pay reparations for the immense damage caused during the nearly four-year conflict.

Alternative Proposals

Belgium, supported by Italy, Bulgaria, and Malta, has asked the EU to consider an different approach for financing Ukraine. This entails joint EU debt issuance to secure a loan, backed by unused funds within the European budget.

This alternative move, nevertheless, demands unanimity among all 27 EU countries. The Hungarian government, viewed as aligned with the Kremlin, has previously signaled its objection.

Speaking on Monday, the EU foreign policy chief, Kaja Kallas, said the proposed loan scheme as "the strongest solution" for aiding Ukraine. "The reparations loan is based on the Russian frozen assets, meaning it doesn't come from our taxpayers' money, which is equally significant," she stated. "It also delivers a powerful message that if you do all this damage to another country, you have to pay for the reparations."