🔗 Share this article

Russia's monetary authority has declared it is seeking compensation valued at $230 billion from the securities depository Euroclear. This action represents a clear warning by the Kremlin against plans to use immobilized Russian state funds to support Ukraine.

The Financial Lawsuit

According to reports in local state media, the monetary authority filed a lawsuit last week for roughly 18 trillion roubles. This amount corresponds to the stated $230 billion demand.

European Union officials will decide in the coming days on a plan to leverage approximately €210 billion in frozen Russian state funds. The proposal entails granting Ukraine with a large loan to finance its military and financial needs.

The vast majority of these funds, totaling €185 billion, reside at the Euroclear depository in Brussels. This institution acts as the main keeper for the Kremlin's immobilised financial reserves.

Dispute on Ownership

European Union authorities have maintained that their plan is legally sound. They argue is based on the principle that title of the state assets still belongs to Russia, despite being it was immobilized in EU countries shortly after the full-scale invasion of Ukraine.

Moscow, in contrast, has called any use of the funds as theft. Authorities have warned of retaliatory actions, such as confiscating European corporate assets within Russia.

Kirill Dmitriev, who has taken on a key position in peace negotiations, stated on X that Russia "will win in court" and regain its funds. He warned that the EU, the euro, and Euroclear "will suffer" from the proposal.

Geopolitical Maneuvering

In comments seen as an effort to create division between Europe and the United States, Dmitriev characterized the assets plan as "a vicious attack on the right to ownership and the global financial system created by the United States."

The clearing house refused to comment on the new lawsuit. It has previously noted it is contending with over 100 legal cases in Russian courts.

Enforcement Challenges

Although courts in European nations are not expected to recognize judgments from Russian courts, analysts anticipate Moscow to seek enforcement in countries with stronger ties to the Kremlin.

"The Bank of Russia may attempt to enforce a Russian court's decision against Euroclear in jurisdictions like China, Hong Kong, the UAE, Kazakhstan, and other friendly states, provided that relevant holdings can be identified," stated a legal expert from an international firm.

European Safeguards

EU officials indicated they are developing measures to deter other nations from aiding any Russian legal action against EU entities. Additionally, they are crafting safeguards to protect EU member states with assets in Russia from what they call "illegal expropriation."

How the Funding Would Work

Under the complex plan, the EU would provide an first €90 billion loan to Ukraine, backed by the cash generated from the immobilized assets at Euroclear. Critically, Russia's ownership claim on the principal funds would remain unaffected.

Ukraine would solely be obligated to repay the money in the event that Russia consented to pay reparations for the immense destruction inflicted during the nearly four-year conflict.

Other Funding Ideas

Belgium, supported by Italy, Bulgaria, and Malta, has urged the EU to consider an different approach for financing Ukraine. This involves joint EU debt issuance to secure a loan, using unallocated funds within the EU budget.

This alternative move, nevertheless, requires unanimity among all 27 EU countries. The Hungarian government, viewed as friendly with the Kremlin, has already expressed its objection.

Commenting on Monday, the EU top diplomat, Kaja Kallas, said the reparations loan as "the most credible option" for supporting Ukraine. "This mechanism is secured against the Russian frozen assets, which means it is not drawn from our taxpayers' money, which is equally significant," she stated. "Furthermore, it sends a powerful message that when you do all this damage to another country, you must pay for the rebuilding."