The Russian central bank has stated it is seeking compensation totaling $230 billion against the securities depository Euroclear. This move constitutes a direct warning from the Kremlin against proposals to utilize frozen Russian sovereign funds to support Ukraine.
According to reports in Russian news outlets, the central bank filed a claim last week for approximately 18 trillion roubles. This figure is equivalent to the aforementioned $230 billion claim.
European Union officials will decide in the coming days on a proposal to leverage approximately €210 billion in frozen Russian assets. The proposal involves granting Ukraine with a large loan to finance its defence and economic stability.
Most of these assets, amounting to €185 billion, are held at the Euroclear depository in Brussels. This institution acts as the main keeper for the Russian immobilised sovereign wealth.
EU officials have argued that their plan is on solid legal ground. They argue is based on the fact that title of the sovereign wealth remains with Russia, despite being it was frozen in European jurisdictions shortly after the full-scale military offensive of Ukraine.
The Russian government, however, has called any utilization of the assets as illegal appropriation. It has warned of reciprocal actions, including seizing EU private investors' holdings within Russia.
Kirill Dmitriev, a figure who has assumed a key position in peace negotiations, wrote on a social media platform that Russia "will prevail in court" and retrieve its assets. He warned that the European Union, 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, Dmitriev described the proposal as "a severe attack on property rights and the international reserves system created by the United States."
The clearing house refused to provide a statement on the new lawsuit. It has previously stated it is contending with more than 100 lawsuits in Russian courts.
While judges in European nations are unlikely to enforce rulings from Russian tribunals, analysts anticipate Moscow to pursue implementation in countries with closer ties to the Kremlin.
"The Bank of Russia could try to enforce a Russian legal ruling against Euroclear in jurisdictions like China, Hong Kong, the UAE, Kazakhstan, and other sympathetic nations, provided that such assets can be identified," commented a legal expert from an NSP law firm.
European authorities indicated they are working on steps to deter other countries from assisting any Russian legal action against European entities. They are also crafting protections to shield EU member states with assets in Russia from what they call "illegal expropriation."
Under the detailed scheme, the EU would issue an first €90 billion loan to Ukraine, using the proceeds generated from the immobilized assets at Euroclear. Importantly, Russia's legal claim on the principal funds would stay unaffected.
Kyiv would only be obligated to return the loan if and when Russia agreed to pay reparations for the vast destruction caused during the nearly four-year war.
The Belgian government, supported by Italy, Bulgaria, and Malta, has asked the EU to examine an different method for financing Ukraine. This involves common EU debt issuance to secure a loan, using unused funds within the European budget.
This alternative move, nevertheless, requires unanimity among all 27 member states. The Hungarian government, considered friendly with the Kremlin, has previously expressed its objection.
Speaking on Monday, the EU top diplomat, a senior official, said the reparations loan as "the most credible solution" for supporting Ukraine. "The reparations loan is secured against the Russian frozen assets, which means it is not drawn from our public funds, which is equally significant," she remarked. "It also delivers a powerful message that when you do all this destruction to another nation, you have to pay for the reparations."
