🔗 Share this article

Russia's monetary authority has announced it is pursuing damages amounting to $230 billion from the financial institution Euroclear. This action is a clear warning by the Kremlin against proposals to utilize immobilized Russian sovereign assets to aid Ukraine.

The Legal Claim

Based on accounts in Russian state media, the monetary authority initiated a lawsuit last week for roughly 18 trillion roubles. This amount corresponds to the stated $230 billion claim.

European Union officials are set to decide later this week regarding a plan to leverage approximately €210 billion in frozen Russian assets. This scheme involves providing Ukraine with a large loan to fund its defence and economic needs.

The vast majority of these assets, totaling €185 billion, are stored at the Euroclear clearing house in Brussels. This institution acts as the main keeper for the Russian frozen financial reserves.

A Clash Over Legality

EU officials have argued that their proposal is on solid legal ground. Their position is based on the fact that ownership of the state assets still belongs to Russia, even though it was immobilized in EU jurisdictions shortly after the full-scale military offensive of Ukraine.

The Russian government, in contrast, has called any use of the funds as theft. Authorities have threatened retaliatory measures, such as confiscating European corporate holdings within Russia.

Kirill Dmitriev, a figure who has assumed a prominent role in peace negotiations, wrote on X that Russia "will prevail in court" and regain its assets. He warned that the European Union, the euro, and Euroclear "will face consequences" from the proposal.

Strategic Positioning

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

Euroclear refused to provide a statement on the latest legal action. The institution has previously noted it is facing over 100 lawsuits in Russian jurisdictions.

Enforcement Challenges

While courts in EU countries are not expected to recognize judgments from Russian courts, experts expect Moscow to pursue implementation in countries with stronger relations to the Kremlin.

"Russian monetary authorities could try to implement a Russian legal ruling against Euroclear in jurisdictions like China, Hong Kong, the UAE, Kazakhstan, and other sympathetic nations, if relevant assets can be identified," stated a legal expert from an international firm.

EU Countermeasures

EU officials indicated they are developing measures to discourage other countries from assisting any Russian legal action against European companies. They are also crafting safeguards to protect EU member states with investments in Russia from what they call "unlawful expropriation."

How the Funding Would Work

According to the detailed plan, the EU would provide an initial €90 billion loan to Ukraine, using the cash generated from the frozen assets at Euroclear. Importantly, Russia's ownership claim on the underlying funds would remain untouched.

Kyiv would solely be obligated to return the money if and when Russia agreed to pay compensation for the vast destruction inflicted during the ongoing conflict.

Other Funding Ideas

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

This alternative move, nevertheless, requires unanimity among all 27 member states. The Hungarian government, considered aligned with the Kremlin, has previously signaled its objection.

Commenting on Monday, the EU top diplomat, a senior official, described the proposed loan scheme as "the most credible option" for supporting Ukraine. "This mechanism is secured against the Russian immobilized funds, which means it is not drawn from our taxpayers' money, which is equally important," she remarked. "It also delivers a clear message that if you cause all this destruction to another country, you have to pay for the rebuilding."