🔗 Share this article

Russia's monetary authority has declared it is pursuing compensation amounting to $230 billion from the securities depository Euroclear. This legal step constitutes a direct warning by the Kremlin against plans to utilize frozen Russian state funds to support Ukraine.

The Legal Claim

According to accounts in Russian state media, the monetary authority initiated a claim last week for an estimated 18 trillion roubles. This sum corresponds to the stated $230 billion demand.

European Union officials will determine later this week regarding a proposal to use around €210 billion in frozen Russian state funds. The proposal involves granting Ukraine with a substantial loan to finance its defence and economic stability.

Most of these assets, totaling €185 billion, reside at the Euroclear clearing house 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 principle that title of the state assets remains with Russia, even though it was frozen in European countries shortly after the full-scale military offensive of Ukraine.

Moscow, in contrast, has labeled any use of the funds as theft. Authorities have threatened reciprocal actions, including confiscating EU private investors' holdings within Russia.

Kirill Dmitriev, who has assumed a key position in diplomatic talks, stated on a social media platform that Russia "will win in court" and retrieve its assets. He warned that the EU, the common currency, and Euroclear "will face consequences" from the proposal.

Geopolitical Maneuvering

In comments seen as an attempt to create division between Europe and the United States, the official characterized the proposal as "a vicious attack on the right to ownership and the global financial system established by the United States."

Euroclear declined to provide a statement on the new legal action. The institution has previously stated it is facing more than 100 lawsuits in Russian courts.

Legal Hurdles Ahead

Although courts in EU countries are not expected to enforce rulings from Russian tribunals, analysts anticipate Moscow to pursue enforcement in nations with closer relations to the Kremlin.

"The Bank of Russia may attempt to implement a Russian court's decision against Euroclear in countries such as China, Hong Kong, the UAE, Kazakhstan, and other friendly states, if such assets can be identified," commented a legal expert from an international firm.

European Safeguards

European authorities said they are developing measures to deter other nations from assisting any Russian lawsuits against EU companies. They are also crafting safeguards to protect EU member states with assets in Russia from what they term "illegal expropriation."

How the Funding Would Work

Under the complex plan, the EU would provide an initial €90 billion loan to Ukraine, using the cash earned from the frozen assets at Euroclear. Importantly, Russia's legal claim on the underlying funds would stay untouched.

Ukraine would solely be required to repay the money if and when Russia agreed to pay compensation for the vast 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 consider an different approach for funding Ukraine. This involves joint EU debt issuance to fund a loan, using unused funds within the EU budget.

Such a proposal, nevertheless, demands unanimity among all 27 member states. Hungary's government, considered aligned with the Kremlin, has already expressed its objection.

Speaking on Monday, the EU top diplomat, Kaja Kallas, said the proposed loan scheme as "the strongest solution" for aiding Ukraine. "The reparations loan is based on the Russian immobilized funds, which means it doesn't come from our public funds, which is also significant," she stated. "It also sends a powerful signal that when you do all this damage to another nation, you must pay for the rebuilding."