🔗 Share this article

The Russian central bank has announced it is seeking damages totaling $230 billion from the financial institution Euroclear. This legal step constitutes a clear response from the Kremlin regarding proposals to use frozen Russian sovereign assets to aid Ukraine.

The Substantial Demand

According to accounts in Russian news outlets, the monetary authority filed a claim last week for roughly 18 trillion roubles. This figure is equivalent to the aforementioned $230 billion claim.

EU leaders will decide in the coming days regarding a plan to leverage around €210 billion in immobilized Russian assets. The proposal entails granting Ukraine with a large loan to fund its defence and financial stability.

Most of these funds, totaling €185 billion, are held at the Euroclear clearing house in Brussels. This institution acts as the primary keeper for the Russian frozen sovereign wealth.

Dispute on Ownership

EU officials have maintained that their proposal is legally sound. Their position rests on the principle that title of the sovereign wealth still belongs to Russia, even though it was frozen in European countries following the full-scale invasion of Ukraine.

The Russian government, in contrast, has called any utilization of the assets as theft. Authorities have threatened retaliatory actions, including confiscating EU corporate holdings within Russia.

The head of Russia's sovereign wealth fund, a figure who has taken on a prominent position in peace negotiations, wrote on a social media platform that Russia "will win in court" and retrieve its assets. He warned that the European Union, the euro, and Euroclear "will suffer" from the proposal.

Wider Implications

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

Euroclear refused to provide a statement on the latest legal action. The institution has previously noted it is facing more than 100 legal cases in Russian courts.

Legal Hurdles Ahead

While judges in European nations are unlikely to enforce rulings from Russian courts, analysts anticipate Moscow to pursue implementation in nations with closer relations to the Kremlin.

"Russian monetary authorities may attempt to implement a Russian legal ruling against Euroclear in jurisdictions like China, Hong Kong, the UAE, Kazakhstan, and other friendly states, provided that such holdings can be located," stated a lawyer from an international firm.

EU Countermeasures

European authorities indicated they are working on measures to deter other nations from assisting any Russian legal action against EU companies. Additionally, they are crafting protections to shield EU member states with assets in Russia from what they call "unlawful expropriation."

How the Funding Would Work

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

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

Other Funding Ideas

Belgium, supported by Italy, Bulgaria, and Malta, has urged the EU to consider an alternative approach for financing Ukraine. This entails common EU debt issuance to secure a loan, using unused funds within the European budget.

Such a proposal, nevertheless, demands full agreement among all 27 member states. Hungary's government, viewed as friendly with the Kremlin, has already signaled its opposition.

Speaking on Monday, the EU foreign policy chief, Kaja Kallas, said the proposed loan scheme as "the most credible solution" for aiding Ukraine. "The reparations loan is based on the Russian immobilized funds, which means it is not drawn from our public funds, which is equally important," she remarked. "It also sends a powerful message that if you do all this damage to another country, you have to pay for the rebuilding."