Russia's monetary authority has announced it is claiming compensation amounting to $230 billion against the securities depository Euroclear. This action constitutes a direct response from the Kremlin against proposals to use frozen Russian sovereign assets to aid Ukraine.
Based on reports in local news outlets, the monetary authority filed a claim last week for approximately 18 trillion roubles. This figure is equivalent to the stated $230 billion claim.
EU leaders will decide in the coming days regarding a proposal to use around €210 billion in frozen Russian state funds. The proposal involves providing Ukraine with a substantial loan to finance its military and economic stability.
The vast majority of these funds, amounting to €185 billion, reside at the Euroclear depository in Brussels. This institution serves as the main custodian for the Russian frozen sovereign wealth.
EU officials have maintained that their plan is on solid legal ground. They argue rests on the fact that title of the sovereign wealth still belongs to Russia, despite being it was immobilized in EU countries following the 2022 invasion of Ukraine.
Moscow, however, has called any use of the assets as theft. Authorities have warned of reciprocal actions, including confiscating European corporate assets within Russia.
The head of Russia's sovereign wealth fund, who has taken on a prominent position in peace negotiations, stated on a social media platform that Russia "will prevail in court" and regain its funds. He warned that the EU, the common currency, and Euroclear "will suffer" from the proposal.
With statements interpreted 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 created by the United States."
The clearing house declined to provide a statement on the latest legal action. It has in the past noted it is contending with more than 100 lawsuits in Russian jurisdictions.
Although courts in EU countries are unlikely to recognize rulings from Russian tribunals, experts anticipate Moscow to pursue enforcement in countries with closer ties to the Kremlin.
"The Bank of Russia may attempt to enforce a Russian court's decision against Euroclear in countries such as China, Hong Kong, the UAE, Kazakhstan, and other sympathetic states, provided that such holdings can be located," commented a lawyer from an international firm.
European authorities said they are developing measures to deter other nations from aiding any Russian legal action against EU companies. Additionally, they are designing protections to shield EU member states with investments in Russia from what they call "illegal expropriation."
Under the detailed plan, the EU would provide an first €90 billion loan to Ukraine, using the proceeds earned from the frozen assets at Euroclear. Importantly, Russia's legal claim on the principal funds would remain untouched.
Kyiv would only be required to return the money in the event that Russia agreed to pay compensation for the immense damage caused during the ongoing conflict.
Belgium, backed by Italy, Bulgaria, and Malta, has urged the EU to examine an alternative method for financing Ukraine. This involves common EU borrowing to fund a loan, using unused funds within the EU budget.
Such a proposal, nevertheless, requires full agreement among all 27 member states. Hungary's government, viewed as friendly with the Kremlin, has previously signaled its opposition.
Commenting on Monday, the EU top diplomat, a senior official, said the proposed loan scheme as "the strongest option" for aiding Ukraine. "The reparations loan is secured against the Russian immobilized funds, meaning it is not drawn from our taxpayers' money, which is equally significant," she stated. "Furthermore, it delivers a clear signal that when you do all this damage to another nation, you must pay for the reparations."
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