🔗 Share this article

Russia's monetary authority has declared it is claiming damages valued at $230 billion from the financial institution Euroclear. This legal step constitutes a clear response by the Kremlin regarding plans to utilize immobilized Russian sovereign funds to support Ukraine.

The Substantial Demand

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

EU leaders will decide in the coming days regarding a proposal to leverage around €210 billion in immobilized Russian assets. The proposal entails granting Ukraine with a substantial loan to finance its military and financial needs.

Most of these funds, totaling €185 billion, are held at the Euroclear clearing house in Brussels. This institution serves as the main keeper for the Kremlin's immobilised sovereign wealth.

Dispute on Ownership

European Union officials have argued that their proposal is on solid legal ground. Their position is based on the principle that ownership of the state assets still belongs to Russia, despite being it was frozen in European countries shortly after the full-scale military offensive of Ukraine.

Moscow, however, has called any use of the funds as illegal appropriation. It has warned of reciprocal actions, including seizing EU private investors' assets within Russia.

Kirill Dmitriev, a figure who has taken on a key role in peace negotiations, stated on a social media platform that Russia "will win in court" and retrieve its funds. He warned that the EU, the euro, and Euroclear "will suffer" from the proposal.

Strategic Positioning

In comments seen as an attempt to drive a wedge between Europe and the United States, the official characterized the assets plan as "a vicious assault on property rights and the global financial system created by the United States."

Euroclear declined to comment on the latest lawsuit. It has in the past noted it is contending with over 100 lawsuits in Russian jurisdictions.

Legal Hurdles Ahead

Although courts in European nations are unlikely to enforce judgments from Russian tribunals, analysts expect Moscow to pursue enforcement in countries with closer relations to the Kremlin.

"Russian monetary authorities could try to implement a Russian legal ruling against Euroclear in countries such as China, Hong Kong, the UAE, Kazakhstan, and other friendly states, provided that relevant assets can be located," commented a legal expert from an international firm.

European Safeguards

European authorities indicated they are working on steps to deter other countries from assisting any Russian lawsuits against EU companies. They are also crafting safeguards to protect EU countries with assets in Russia from what they call "unlawful expropriation."

The Proposed Loan Mechanism

According to the complex plan, the EU would provide an first €90 billion loan to Ukraine, using the proceeds earned from the frozen assets at Euroclear. Importantly, Russia's ownership claim on the principal funds would remain unaffected.

Kyiv would solely be obligated to return the money if and when Russia agreed to pay compensation for the immense damage inflicted during the ongoing war.

Alternative Proposals

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

This alternative move, nevertheless, demands full agreement among all 27 EU countries. The Hungarian government, viewed as aligned with the Kremlin, has already signaled its objection.

Speaking on Monday, the EU foreign policy chief, a senior official, said the reparations loan as "the most credible option" for aiding Ukraine. "The reparations loan is based on the Russian frozen assets, meaning it doesn't come from our taxpayers' money, which is equally important," she remarked. "It also delivers a powerful signal that when you do all this damage to another nation, you have to pay for the rebuilding."