🔗 Share this article

The Russian central bank has announced it is claiming compensation amounting to $230 billion from the securities depository Euroclear. This legal step is a clear response from the Kremlin regarding proposals to use immobilized Russian state funds to aid Ukraine.

The Financial Lawsuit

Based on reports in local state media, the monetary authority filed a lawsuit last week for roughly 18 trillion roubles. This sum is equivalent to the aforementioned $230 billion demand.

European Union officials are set to decide in the coming days on a plan to use approximately €210 billion in immobilized Russian state funds. This scheme involves providing Ukraine with a substantial loan to fund its defence and economic stability.

The vast majority of these assets, amounting to €185 billion, reside at the Euroclear depository in Brussels. This institution acts as the primary keeper for the Kremlin's immobilised sovereign wealth.

A Clash Over Legality

EU officials have maintained that their proposal is legally sound. They argue rests on the fact that title of the state assets remains with Russia, even though it was frozen in European jurisdictions shortly after the 2022 military offensive of Ukraine.

Moscow, however, has called any use of the funds as theft. Authorities have warned of retaliatory actions, including seizing European corporate assets within Russia.

The head of Russia's sovereign wealth fund, a figure who has assumed a key position in peace negotiations, wrote on a social media platform that Russia "will win in court" and retrieve its assets. He warned that the EU, the euro, and Euroclear "will face consequences" from the proposal.

Strategic Positioning

In comments interpreted as an attempt to drive a wedge between Europe and the United States, the official characterized the assets plan as "a vicious attack on property rights and the international reserves system established by the United States."

The clearing house declined to provide a statement on the new legal action. The institution has previously noted it is facing over 100 lawsuits in Russian jurisdictions.

Legal Hurdles Ahead

While courts in EU countries are not expected to enforce rulings from Russian courts, analysts expect Moscow to pursue implementation in countries with closer relations 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 friendly nations, if such holdings can be identified," stated a lawyer from an international firm.

European Safeguards

European authorities said they are working on measures to discourage other nations from aiding any Russian lawsuits against European companies. They are also designing safeguards to shield EU member states with investments in Russia from what they term "illegal expropriation."

How the Funding Would Work

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

Kyiv would only be required to repay the loan in the event that Russia agreed to pay reparations for the immense damage caused during the ongoing war.

Other Funding Ideas

Belgium, supported by Italy, Bulgaria, and Malta, has urged the EU to consider an different approach for financing Ukraine. This involves common EU debt issuance to secure a loan, using unallocated funds within the EU budget.

This alternative move, however, requires unanimity among all 27 EU countries. Hungary's government, viewed as friendly with the Kremlin, has already signaled its objection.

Speaking on Monday, the EU top diplomat, Kaja Kallas, described the reparations loan as "the most credible solution" for supporting Ukraine. "The reparations loan is based on the Russian immobilized funds, meaning it doesn't come from our taxpayers' money, which is also important," she stated. "Furthermore, it delivers a powerful signal that if you cause all this damage to another nation, you have to pay for the rebuilding."