🔗 Share this article

Russia's monetary authority has announced it is claiming damages amounting to $230 billion from the securities depository Euroclear. This action represents a clear warning by the Kremlin regarding plans to utilize frozen Russian sovereign funds to support Ukraine.

The Financial Lawsuit

According to reports in local news outlets, the central bank filed a claim last week for an estimated 18 trillion roubles. This sum corresponds to the stated $230 billion demand.

European Union officials are set to decide in the coming days regarding a plan to use around €210 billion in frozen Russian assets. This scheme entails providing Ukraine with a substantial loan to fund its military and economic stability.

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

A Clash Over Legality

EU officials have maintained that their proposal is legally sound. Their position rests on the principle that ownership of the state assets remains with Russia, even though it was frozen in European countries shortly after the 2022 invasion of Ukraine.

Moscow, however, has labeled any use of the funds as illegal appropriation. Authorities have threatened retaliatory actions, including confiscating European corporate holdings within Russia.

Kirill Dmitriev, a figure who has assumed a prominent position in diplomatic talks, stated on a social media platform that Russia "will prevail in court" and regain its funds. He warned that the European Union, the common currency, and Euroclear "will face consequences" from the plan.

Strategic Positioning

In comments interpreted as an attempt to create division between Europe and the United States, Dmitriev characterized the assets plan as "a severe attack on the right to ownership and the international reserves system created by the United States."

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

Enforcement Challenges

While courts in EU countries are unlikely to recognize rulings from Russian tribunals, experts expect Moscow to seek enforcement in nations with stronger ties 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 sympathetic nations, if relevant holdings can be located," stated a legal expert from an international firm.

EU Countermeasures

EU officials indicated they are developing measures to deter other nations from assisting any Russian legal action against EU companies. Additionally, they are designing protections to protect EU member states with investments in Russia from what they term "unlawful expropriation."

How the Funding Would Work

Under the detailed plan, the EU would issue an first €90 billion loan to Ukraine, using the proceeds generated from the immobilized assets at Euroclear. Critically, Russia's ownership claim on the principal funds would remain untouched.

Ukraine would solely be required to repay the money if and when Russia agreed to pay reparations for the vast damage inflicted during the nearly four-year conflict.

Other Funding Ideas

The Belgian government, supported by Italy, Bulgaria, and Malta, has urged 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.

Such a proposal, however, requires full agreement among all 27 member states. The Hungarian government, viewed as aligned with the Kremlin, has previously signaled its opposition.

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 frozen assets, which means it doesn't come from our taxpayers' money, which is equally important," she remarked. "Furthermore, it delivers a clear signal that if you do all this damage to another country, you have to pay for the rebuilding."