🔗 Share this article

Russia's monetary authority has stated it is claiming compensation totaling $230 billion from the securities depository Euroclear. This action is a direct response from the Kremlin regarding proposals to use frozen Russian state assets to aid Ukraine.

The Substantial Demand

According to accounts in Russian state media, the monetary authority filed a lawsuit last week for roughly 18 trillion roubles. This figure is equivalent to the aforementioned $230 billion claim.

European Union officials will determine in the coming days on a proposal to leverage approximately €210 billion in frozen Russian state funds. The proposal entails granting Ukraine with a substantial loan to finance its military and economic stability.

The vast majority of these assets, amounting to €185 billion, reside at the Euroclear depository in Brussels. This institution serves as the primary custodian for the Kremlin's frozen financial reserves.

Divergent Legal Views

EU authorities have maintained that their plan is on solid legal ground. Their position rests on the fact that ownership of the state assets remains with Russia, despite being it was frozen in European jurisdictions shortly after the full-scale invasion of Ukraine.

The Russian government, however, has labeled any use of the funds as illegal appropriation. It has threatened reciprocal measures, such as seizing European corporate holdings within Russia.

Kirill Dmitriev, a figure who has assumed a key position in peace negotiations, wrote on X that Russia "will prevail in court" and retrieve its assets. He added that the European Union, the euro, and Euroclear "will suffer" from the plan.

Geopolitical Maneuvering

With statements interpreted as an attempt to create division between Europe and the United States, the official characterized the assets plan as "a severe assault on property rights and the international reserves system created by the United States."

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

Enforcement Challenges

While courts in EU countries are not expected to enforce judgments from Russian tribunals, analysts anticipate Moscow to pursue implementation in countries with stronger relations 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 nations, provided that such assets can be identified," commented a lawyer from an international firm.

European Safeguards

EU officials said they are developing steps to deter other countries from aiding any Russian legal action against European entities. They are also crafting protections to protect EU member states with investments in Russia from what they term "illegal expropriation."

The Proposed Loan Mechanism

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

Ukraine would solely be obligated to repay the loan if and when Russia agreed to pay compensation for the immense destruction 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 alternative approach for financing Ukraine. This involves joint EU debt issuance to fund a loan, using unallocated funds within the EU budget.

Such a proposal, however, demands unanimity among all 27 EU countries. The Hungarian government, viewed as friendly with the Kremlin, has previously expressed its opposition.

Speaking on Monday, the EU foreign policy chief, Kaja Kallas, said the reparations loan as "the strongest solution" for supporting Ukraine. "This mechanism is secured against the Russian frozen assets, meaning it is not drawn from our public funds, which is also significant," she stated. "It also sends a clear message that if you cause all this damage to another nation, you have to pay for the rebuilding."