🔗 Share this article

The Russian central bank has declared it is claiming damages totaling $230 billion from the financial institution Euroclear. This legal step represents a clear response by the Kremlin regarding proposals to utilize frozen Russian sovereign funds to aid Ukraine.

The Financial Lawsuit

Based on reports in local state media, the monetary authority filed a claim last week for an estimated 18 trillion roubles. This figure corresponds to the stated $230 billion claim.

European Union officials are set to determine in the coming days regarding a plan to use approximately €210 billion in immobilized Russian assets. The proposal involves providing Ukraine with a substantial loan to fund its military and financial stability.

Most of these assets, amounting to €185 billion, are stored at the Euroclear depository in Brussels. This institution acts as the main custodian for the Russian frozen financial reserves.

Dispute on Ownership

EU officials have maintained that their plan is on solid legal ground. Their position is based on the fact that ownership of the sovereign wealth remains with Russia, even though it was frozen in European jurisdictions following the full-scale military offensive of Ukraine.

The Russian government, in contrast, has called any utilization of the assets as theft. Authorities have warned of retaliatory actions, including seizing EU private investors' assets within Russia.

The head of Russia's sovereign wealth fund, a figure who has taken on a prominent role in peace negotiations, wrote on a social media platform that Russia "will win in court" and regain its assets. He added that the European Union, the common currency, and Euroclear "will suffer" from the proposal.

Wider Implications

In comments interpreted as an effort to create division between Europe and the United States, the official characterized the proposal as "a vicious assault on the right to ownership and the global financial system created by the United States."

Euroclear declined to provide a statement on the new legal action. The institution has in the past stated it is contending with over 100 lawsuits in Russian courts.

Legal Hurdles Ahead

While judges in European nations are not expected to enforce judgments from Russian tribunals, experts anticipate Moscow to pursue implementation in countries with stronger ties 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 sympathetic nations, if such assets can be identified," commented a legal expert from an international firm.

EU Countermeasures

EU officials said they are working on measures to discourage other nations from aiding any Russian lawsuits against European companies. Additionally, they are designing protections to shield EU countries with assets in Russia from what they term "illegal expropriation."

How the Funding Would Work

According to the complex plan, the EU would provide an initial €90 billion loan to Ukraine, using the proceeds generated from the immobilized assets at Euroclear. Critically, Russia's legal claim on the principal funds would remain unaffected.

Kyiv would only be required to repay the money in the event that Russia consented to pay reparations for the immense damage inflicted during the nearly four-year conflict.

Other Funding Ideas

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

Such a proposal, nevertheless, demands unanimity among all 27 EU countries. The Hungarian government, considered friendly with the Kremlin, has previously expressed its objection.

Speaking on Monday, the EU foreign policy chief, Kaja Kallas, described the reparations loan as "the strongest solution" for supporting Ukraine. "The reparations loan is based on the Russian frozen assets, which means it doesn't come from our taxpayers' money, which is also important," she remarked. "Furthermore, it delivers a clear message that when you do all this damage to another nation, you must pay for the rebuilding."