🔗 Share this article

Russia's monetary authority has announced it is pursuing compensation totaling $230 billion from the securities depository Euroclear. This move is a direct response by the Kremlin regarding plans to utilize frozen Russian sovereign assets to support Ukraine.

The Financial Lawsuit

Based on accounts in local state media, the monetary authority filed a claim last week for approximately 18 trillion roubles. This sum corresponds to the stated $230 billion demand.

EU leaders are set to decide in the coming days on a proposal to use approximately €210 billion in immobilized Russian state funds. This scheme entails providing Ukraine with a substantial loan to finance its military and financial stability.

The vast majority of these assets, amounting to €185 billion, are stored at the Euroclear clearing house in Brussels. This institution serves as the main custodian for the Russian frozen sovereign wealth.

Dispute on Ownership

EU authorities have maintained that their plan is on solid legal ground. They argue is based on the principle that title of the sovereign wealth still belongs to Russia, despite being it was frozen in European jurisdictions following the full-scale invasion of Ukraine.

Moscow, however, has labeled any utilization of the assets as illegal appropriation. It has warned of reciprocal measures, including seizing EU corporate assets within Russia.

The head of Russia's sovereign wealth fund, who has taken on a prominent role in diplomatic talks, stated on a social media platform that Russia "will prevail in court" and regain its assets. He added that the European Union, the euro, and Euroclear "will suffer" from the plan.

Geopolitical Maneuvering

In comments interpreted as an attempt to drive a wedge between Europe and the United States, Dmitriev characterized the assets plan as "a severe attack on the right to ownership and the international reserves system created by the United States."

The clearing house declined to provide a statement on the new lawsuit. It has in the past noted it is facing more than 100 legal cases in Russian courts.

Legal Hurdles Ahead

While judges in EU countries are unlikely to recognize rulings from Russian tribunals, experts anticipate Moscow to seek implementation in countries with closer ties to the Kremlin.

"Russian monetary authorities could try to implement a Russian legal ruling against Euroclear in countries such as China, Hong Kong, the UAE, Kazakhstan, and other sympathetic states, if such holdings can be located," commented a legal expert from an NSP law firm.

European Safeguards

European authorities said they are developing steps to deter other nations from assisting any Russian lawsuits against EU entities. They are also crafting protections to protect EU countries with assets in Russia from what they call "unlawful expropriation."

How the Funding Would Work

According to the detailed plan, the EU would issue an initial €90 billion loan to Ukraine, backed by the cash generated from the frozen assets at Euroclear. Critically, Russia's ownership claim on the principal funds would stay untouched.

Kyiv would only be required to repay the loan if and when Russia agreed to pay reparations for the immense damage caused during the nearly four-year conflict.

Other Funding Ideas

Belgium, backed by Italy, Bulgaria, and Malta, has asked the EU to consider an alternative approach for funding Ukraine. This entails common EU borrowing to fund a loan, backed by unallocated funds within the EU budget.

This alternative move, however, requires unanimity among all 27 member states. Hungary's government, viewed as friendly with the Kremlin, has previously expressed its opposition.

Speaking on Monday, the EU top diplomat, a senior official, described the proposed loan scheme as "the strongest solution" for aiding Ukraine. "This mechanism is based on the Russian immobilized funds, meaning it is not drawn from our taxpayers' money, which is equally significant," she remarked. "It also delivers a powerful signal that when you cause all this damage to another country, you have to pay for the reparations."