🔗 Share this article

Russia's monetary authority has declared it is pursuing damages amounting to $230 billion from the securities depository Euroclear. This action constitutes a clear warning by the Kremlin against proposals to use frozen Russian state funds to support Ukraine.

The Financial Lawsuit

According to accounts in Russian state media, the monetary authority initiated a claim last week for approximately 18 trillion roubles. This sum is equivalent to the aforementioned $230 billion claim.

EU leaders are set to determine in the coming days regarding a proposal to leverage approximately €210 billion in frozen Russian assets. The proposal involves 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 clearing house in Brussels. Euroclear acts as the main keeper for the Russian frozen financial reserves.

Dispute on Ownership

European Union officials have argued that their plan is on solid legal ground. Their position rests on the fact that title of the state assets still belongs to Russia, even though it was immobilized in EU countries following the full-scale military offensive of Ukraine.

The Russian government, in contrast, has labeled any utilization of the funds as illegal appropriation. Authorities have warned of reciprocal measures, such as seizing EU corporate assets within Russia.

Kirill Dmitriev, a figure who has taken on a key position in peace negotiations, stated on a social media platform that Russia "will win in court" and retrieve its funds. He warned that the EU, the common currency, and Euroclear "will face consequences" from the proposal.

Geopolitical Maneuvering

With statements interpreted as an effort to create division between Europe and the United States, the official described the proposal as "a severe attack on the right to ownership and the global financial system created by the United States."

Euroclear refused to comment on the new lawsuit. The institution has in the past stated it is contending with over 100 legal cases in Russian jurisdictions.

Enforcement Challenges

While judges in European nations are not expected to recognize judgments from Russian courts, experts anticipate Moscow to seek implementation in countries with closer ties to the Kremlin.

"Russian monetary authorities may attempt to enforce a Russian court's decision against Euroclear in countries such as China, Hong Kong, the UAE, Kazakhstan, and other friendly nations, if relevant holdings can be located," commented a legal expert from an international firm.

EU Countermeasures

European authorities said they are working on steps to discourage other nations from aiding any Russian lawsuits against EU companies. They are also designing protections to shield EU countries with investments in Russia from what they call "unlawful expropriation."

How the Funding Would Work

Under the detailed scheme, the EU would issue an first €90 billion loan to Ukraine, backed by the cash generated from the frozen assets at Euroclear. Importantly, Russia's legal claim on the principal funds would stay untouched.

Kyiv would only be required to repay the loan in the event that Russia consented to pay compensation for the vast damage caused during the nearly four-year war.

Other Funding Ideas

Belgium, backed by Italy, Bulgaria, and Malta, has asked the EU to consider an different method for funding Ukraine. This involves common EU borrowing to secure a loan, backed by unallocated funds within the European budget.

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

Speaking on Monday, the EU foreign policy chief, a senior official, said the proposed loan scheme as "the strongest option" for supporting Ukraine. "The reparations loan is secured against the Russian frozen assets, meaning it is not drawn from our public funds, which is also important," she stated. "Furthermore, it sends a powerful signal that if you cause all this damage to another country, you must pay for the rebuilding."