🔗 Share this article

The Russian central bank has declared it is claiming compensation totaling $230 billion against the securities depository Euroclear. This legal step is a direct response by the Kremlin against plans to use immobilized Russian sovereign funds to support Ukraine.

The Legal Claim

According to reports in Russian news outlets, the monetary authority filed a claim last week for an estimated 18 trillion roubles. This figure is equivalent to the stated $230 billion demand.

EU leaders are set to determine in the coming days regarding a plan to use approximately €210 billion in immobilized Russian assets. The proposal involves providing Ukraine with a large loan to finance its military and economic needs.

Most of these funds, totaling €185 billion, are stored at the Euroclear depository in Brussels. Euroclear acts as the main custodian for the Russian frozen financial reserves.

Dispute on Ownership

European Union authorities have maintained that their proposal is legally sound. Their position rests on the principle that title of the state assets remains with Russia, even though it was frozen in European countries following the full-scale military offensive of Ukraine.

Moscow, however, has labeled any utilization of the funds as illegal appropriation. Authorities have threatened retaliatory measures, such as seizing European private investors' holdings within Russia.

The head of Russia's sovereign wealth fund, a figure who has taken on a key position in peace negotiations, wrote on X that Russia "will win in court" and retrieve its funds. He added that the EU, the common currency, and Euroclear "will suffer" from the plan.

Geopolitical Maneuvering

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

The clearing house refused to provide a statement on the new legal action. It has previously stated it is facing more than 100 legal cases in Russian courts.

Enforcement Challenges

While judges in EU countries are not expected to enforce judgments from Russian tribunals, analysts anticipate Moscow to seek implementation in nations with closer ties to the Kremlin.

"The Bank of Russia may attempt to implement a Russian court's decision against Euroclear in jurisdictions like China, Hong Kong, the UAE, Kazakhstan, and other sympathetic nations, if relevant assets can be located," stated a legal expert from an NSP law firm.

European Safeguards

European authorities indicated they are developing steps to discourage other countries from aiding any Russian lawsuits against European companies. They are also crafting protections to protect EU member states with assets in Russia from what they term "illegal expropriation."

How the Funding Would Work

Under the detailed scheme, the EU would provide an initial €90 billion loan to Ukraine, backed by the cash earned from the immobilized assets at Euroclear. Critically, Russia's ownership claim on the principal funds would remain untouched.

Kyiv would solely be obligated to return the loan in the event that Russia agreed to pay reparations for the immense damage caused during the nearly four-year conflict.

Other Funding Ideas

Belgium, supported by Italy, Bulgaria, and Malta, has asked the EU to examine an alternative method for financing Ukraine. This involves joint EU borrowing to fund a loan, using unallocated funds within the EU budget.

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

Speaking on Monday, the EU foreign policy chief, a senior official, described the proposed loan scheme as "the strongest option" for supporting Ukraine. "The reparations loan is based on the Russian frozen assets, which means it is not drawn from our public funds, which is equally important," she remarked. "Furthermore, it delivers a powerful message that when you do all this destruction to another country, you must pay for the reparations."