🔗 Share this article

The Russian central bank has stated it is claiming damages amounting to $230 billion against the securities depository Euroclear. This action represents a direct response from the Kremlin against plans to utilize frozen Russian sovereign assets to aid Ukraine.

The Legal Claim

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

EU leaders will decide in the coming days on a plan to leverage around €210 billion in immobilized Russian assets. This scheme entails providing Ukraine with a substantial loan to fund its military and economic stability.

The vast majority of these funds, amounting to €185 billion, are stored at the Euroclear depository in Brussels. Euroclear acts as the main keeper for the Kremlin's immobilised financial reserves.

Dispute on Ownership

EU authorities have maintained that their plan is legally sound. They argue is based on the fact that ownership of the sovereign wealth still belongs to Russia, even though it was immobilized in European jurisdictions shortly after the 2022 military offensive of Ukraine.

The Russian government, in contrast, has called any use of the funds as illegal appropriation. Authorities have threatened retaliatory measures, including seizing EU private investors' holdings within Russia.

The head of Russia's sovereign wealth fund, who has taken on a prominent position in diplomatic talks, stated on X that Russia "will win in court" and regain its assets. He warned that the European Union, the common currency, and Euroclear "will face consequences" from the proposal.

Strategic Positioning

With statements interpreted as an attempt to create division between Europe and the United States, the official characterized the assets plan as "a vicious assault on property rights and the global financial system established by the United States."

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

Legal Hurdles Ahead

Although judges in European nations are unlikely to recognize rulings from Russian courts, analysts expect Moscow to seek implementation in countries with closer 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 relevant assets can be identified," commented a lawyer from an international firm.

European Safeguards

European authorities indicated they are developing measures to deter other nations from aiding any Russian legal action against European companies. Additionally, they are crafting safeguards to shield EU countries with assets in Russia from what they term "unlawful expropriation."

The Proposed Loan Mechanism

According to the complex plan, the EU would provide an first €90 billion loan to Ukraine, backed by the cash generated from the immobilized assets at Euroclear. Importantly, Russia's ownership claim on the underlying funds would remain unaffected.

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

Alternative Proposals

The Belgian government, supported by Italy, Bulgaria, and Malta, has asked the EU to examine an different approach for funding Ukraine. This involves joint EU borrowing to secure a loan, using unallocated funds within the EU budget.

This alternative move, nevertheless, demands unanimity among all 27 member states. Hungary's government, viewed as friendly with the Kremlin, has previously signaled its opposition.

Speaking on Monday, the EU top diplomat, Kaja Kallas, described the proposed loan scheme as "the strongest option" for aiding Ukraine. "This mechanism is based on the Russian frozen assets, which means it doesn't come from our taxpayers' money, which is equally significant," she stated. "Furthermore, it sends a clear signal that if you do all this destruction to another country, you must pay for the rebuilding."