🔗 Share this article

The Russian central bank has declared it is pursuing damages amounting to $230 billion from the financial institution Euroclear. This move represents a clear warning from the Kremlin against plans to utilize frozen Russian state assets to support Ukraine.

The Legal Claim

According to accounts in local news outlets, the monetary authority filed a claim last week for roughly 18 trillion roubles. This amount corresponds to the stated $230 billion demand.

EU leaders are set to determine later this week regarding a plan to use approximately €210 billion in frozen Russian assets. The proposal involves providing Ukraine with a substantial loan to finance its military and economic stability.

Most of these funds, amounting to €185 billion, reside at the Euroclear clearing house in Brussels. This institution acts as the primary custodian for the Russian immobilised sovereign wealth.

Dispute on Ownership

European Union officials have maintained that their plan is on solid legal ground. They argue rests on the principle that ownership of the state assets remains with Russia, even though it was immobilized in EU countries shortly after the 2022 military offensive of Ukraine.

The Russian government, in contrast, has labeled any utilization of the assets as theft. It has threatened retaliatory actions, including seizing European corporate holdings within Russia.

Kirill Dmitriev, who has taken on a key position in diplomatic talks, wrote on a social media platform that Russia "will win in court" and regain its funds. He added that the European Union, the common currency, and Euroclear "will face consequences" from the proposal.

Geopolitical Maneuvering

In comments interpreted as an effort to create division between Europe and the United States, Dmitriev described the proposal as "a severe assault on property rights and the global financial system established by the United States."

The clearing house declined to provide a statement on the new legal action. The institution has previously noted it is facing over 100 lawsuits in Russian jurisdictions.

Legal Hurdles Ahead

While judges in European nations are not expected to enforce judgments from Russian tribunals, experts anticipate Moscow to pursue enforcement in countries with closer relations to the Kremlin.

"Russian monetary authorities could try to enforce a Russian legal ruling against Euroclear in jurisdictions like China, Hong Kong, the UAE, Kazakhstan, and other friendly states, if such assets can be identified," commented a legal expert from an NSP law firm.

EU Countermeasures

European authorities said they are developing steps to discourage other nations from assisting any Russian legal action against EU entities. They are also designing protections to protect EU member states with assets in Russia from what they term "unlawful expropriation."

How the Funding Would Work

Under the detailed plan, the EU would provide an initial €90 billion loan to Ukraine, using the cash generated from the frozen assets at Euroclear. Importantly, Russia's ownership claim on the principal funds would remain unaffected.

Kyiv would only be required to repay the money if and when Russia consented to pay compensation for the immense destruction inflicted during the ongoing war.

Alternative Proposals

The Belgian government, supported by Italy, Bulgaria, and Malta, has asked the EU to consider an alternative method for funding Ukraine. This entails joint EU borrowing to secure a loan, backed by unused funds within the EU budget.

This alternative move, however, requires full agreement among all 27 member states. Hungary's government, considered friendly with the Kremlin, has already signaled its objection.

Speaking on Monday, the EU foreign policy chief, a senior official, said the proposed loan scheme as "the most credible solution" for supporting Ukraine. "The reparations loan is based on the Russian immobilized funds, which means it is not drawn from our taxpayers' money, which is also significant," she remarked. "Furthermore, it sends a clear signal that if you cause all this destruction to another country, you must pay for the reparations."