🔗 Share this article

The Russian central bank has declared it is claiming damages amounting to $230 billion from the financial institution Euroclear. This legal step represents a clear warning by the Kremlin against proposals to utilize immobilized Russian state funds to support Ukraine.

The Legal Claim

According to accounts in Russian news outlets, the central bank initiated a lawsuit last week for approximately 18 trillion roubles. This amount corresponds to the stated $230 billion claim.

European Union officials will decide later this week regarding a plan to use approximately €210 billion in frozen Russian assets. The proposal entails providing Ukraine with a substantial loan to finance its military and economic stability.

The vast majority of these assets, amounting to €185 billion, are held at the Euroclear clearing house in Brussels. Euroclear serves as the primary keeper for the Kremlin's frozen sovereign wealth.

Dispute on Ownership

European Union authorities have maintained that their proposal is on solid legal ground. They argue is based on the principle that ownership of the state assets remains with Russia, despite being it was immobilized in European jurisdictions following the full-scale invasion of Ukraine.

Moscow, however, has called any use of the funds as theft. It has warned of retaliatory measures, such as seizing European corporate holdings within Russia.

The head of Russia's sovereign wealth fund, a figure who has assumed a key position in diplomatic talks, wrote on a social media platform that Russia "will prevail in court" and retrieve its funds. He warned that the EU, the common currency, and Euroclear "will suffer" from the plan.

Geopolitical Maneuvering

With statements interpreted as an attempt to create division between Europe and the United States, Dmitriev characterized the assets plan as "a vicious assault on the right to ownership and the international reserves system established by the United States."

Euroclear refused to comment on the new lawsuit. The institution has in the past noted it is facing over 100 lawsuits in Russian courts.

Legal Hurdles Ahead

Although judges in EU countries are unlikely to enforce rulings from Russian courts, experts anticipate Moscow to pursue enforcement in nations with closer relations 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 friendly states, provided that relevant holdings can be identified," stated a legal expert from an international firm.

EU Countermeasures

European authorities indicated they are developing steps to discourage other countries from assisting any Russian legal action against European entities. Additionally, they are crafting protections to protect EU countries with investments in Russia from what they call "illegal expropriation."

The Proposed Loan Mechanism

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

Kyiv would solely be obligated to repay the loan if and when Russia agreed to pay reparations for the immense destruction 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 funding Ukraine. This entails joint EU borrowing to secure a loan, backed by unallocated funds within the EU budget.

This alternative move, nevertheless, requires full agreement among all 27 member states. The Hungarian government, considered aligned with the Kremlin, has already signaled its opposition.

Commenting on Monday, the EU foreign policy chief, Kaja Kallas, said the reparations loan as "the strongest solution" for aiding Ukraine. "The reparations loan is secured against the Russian frozen assets, meaning it doesn't come from our public funds, which is equally important," she stated. "Furthermore, it delivers a powerful message that if you cause all this destruction to another country, you have to pay for the reparations."