🔗 Share this article

The Russian central bank has stated it is claiming damages totaling $230 billion against the financial institution Euroclear. This legal step represents a clear response by the Kremlin against plans to use immobilized Russian state assets to support Ukraine.

The Financial Lawsuit

Based on accounts in local news outlets, the central bank filed a claim last week for an estimated 18 trillion roubles. This amount corresponds to the aforementioned $230 billion claim.

EU leaders will decide in the coming days regarding a plan to leverage around €210 billion in immobilized Russian state funds. The proposal entails providing Ukraine with a large loan to fund its military and economic needs.

Most of these assets, totaling €185 billion, are stored at the Euroclear clearing house in Brussels. Euroclear acts as the main custodian for the Russian frozen financial reserves.

Divergent Legal Views

EU officials have maintained that their plan is legally sound. They argue rests on the fact that ownership of the state assets still belongs to Russia, despite being it was frozen in EU countries shortly after the 2022 invasion of Ukraine.

The Russian government, however, has called any use of the funds as theft. Authorities have warned of reciprocal actions, such as seizing European corporate holdings within Russia.

The head of Russia's sovereign wealth fund, who has taken on a key role in diplomatic talks, wrote on a social media platform that Russia "will win in court" and retrieve its funds. He warned that the European Union, the euro, and Euroclear "will suffer" from the proposal.

Geopolitical Maneuvering

With statements seen as an effort to drive a wedge between Europe and the United States, the official characterized the proposal as "a severe assault on the right to ownership and the global financial system established by the United States."

Euroclear declined to comment on the latest lawsuit. The institution has in the past noted it is contending with more than 100 legal cases in Russian courts.

Legal Hurdles Ahead

Although courts in EU countries are not expected to recognize rulings from Russian tribunals, experts expect Moscow to pursue enforcement in countries with stronger ties to the Kremlin.

"The Bank of Russia may attempt to implement a Russian legal ruling against Euroclear in jurisdictions like China, Hong Kong, the UAE, Kazakhstan, and other friendly states, if relevant holdings can be identified," stated a lawyer from an NSP law firm.

European Safeguards

EU officials said they are developing measures to discourage other nations from assisting any Russian legal action against European companies. Additionally, they are crafting protections to shield EU countries with investments in Russia from what they term "illegal expropriation."

The Proposed Loan Mechanism

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

Kyiv would solely be obligated to repay the money in the event that Russia consented to pay compensation for the immense damage inflicted during the ongoing conflict.

Alternative Proposals

The Belgian government, supported by Italy, Bulgaria, and Malta, has asked the EU to examine an different approach for financing Ukraine. This entails common EU debt issuance to secure a loan, using unused funds within the European budget.

Such a proposal, however, demands full agreement among all 27 EU countries. Hungary's government, considered friendly with the Kremlin, has already signaled its opposition.

Commenting on Monday, the EU foreign policy chief, a senior official, said the proposed loan scheme as "the most credible solution" for aiding Ukraine. "This mechanism is based on the Russian immobilized funds, which means it doesn't come from our taxpayers' money, which is also significant," she stated. "Furthermore, it sends a clear message that when you cause all this destruction to another nation, you must pay for the rebuilding."