🔗 Share this article

The Russian central bank has declared it is claiming compensation amounting to $230 billion against the securities depository Euroclear. This move is a direct response from the Kremlin regarding plans to use frozen Russian sovereign assets to aid Ukraine.

The Legal Claim

Based on reports in Russian state media, the central bank filed a claim last week for an estimated 18 trillion roubles. This amount corresponds to the stated $230 billion demand.

European Union officials are set to determine later this week regarding a plan to use around €210 billion in immobilized Russian state funds. The proposal entails granting Ukraine with a large loan to fund its defence and financial needs.

The vast majority of these assets, amounting to €185 billion, are held at the Euroclear depository in Brussels. Euroclear acts as the primary keeper for the Russian immobilised sovereign wealth.

Dispute on Ownership

EU authorities have argued that their plan is on solid legal ground. Their position rests on the principle that ownership of the state assets still belongs to Russia, despite being it was immobilized in European countries following the full-scale invasion of Ukraine.

Moscow, in contrast, has labeled any utilization of the assets as theft. It has threatened reciprocal measures, including confiscating European corporate assets within Russia.

The head of Russia's sovereign wealth fund, a figure who has assumed a prominent position in peace negotiations, stated on X that Russia "will prevail in court" and retrieve its funds. He warned that the EU, the euro, and Euroclear "will suffer" from the plan.

Strategic Positioning

With statements interpreted as an effort to drive a wedge between Europe and the United States, the official described the assets plan as "a severe assault on the right to ownership and the international reserves system created by the United States."

Euroclear declined to provide a statement on the new lawsuit. It has in the past noted it is contending with over 100 legal cases in Russian jurisdictions.

Legal Hurdles Ahead

Although judges in European nations are not expected to recognize judgments from Russian courts, analysts anticipate Moscow to seek enforcement in nations with closer relations to the Kremlin.

"The Bank of Russia could try to enforce a Russian legal ruling against Euroclear in jurisdictions like China, Hong Kong, the UAE, Kazakhstan, and other friendly states, if such assets can be identified," stated a lawyer from an international firm.

EU Countermeasures

EU officials said they are developing steps to discourage other nations from aiding any Russian legal action against EU entities. Additionally, they are crafting protections to protect EU countries with investments in Russia from what they call "illegal expropriation."

The Proposed Loan Mechanism

According to the detailed scheme, the EU would provide an first €90 billion loan to Ukraine, using the cash generated from the immobilized assets at Euroclear. Critically, Russia's ownership claim on the principal funds would stay unaffected.

Kyiv would only be obligated to return the money if and when Russia agreed to pay compensation for the immense damage inflicted during the nearly four-year war.

Alternative Proposals

Belgium, supported by Italy, Bulgaria, and Malta, has asked the EU to examine an different approach for financing Ukraine. This involves common EU borrowing to secure a loan, using unused funds within the European budget.

Such a proposal, nevertheless, demands full agreement among all 27 EU countries. The Hungarian government, viewed as friendly with the Kremlin, has previously signaled its opposition.

Commenting on Monday, the EU foreign policy chief, a senior official, described the proposed loan scheme as "the most credible option" for supporting 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. "Furthermore, it delivers a powerful signal that if you do all this destruction to another nation, you must pay for the rebuilding."