The Russian central bank has announced it is pursuing damages valued at $230 billion against the financial institution Euroclear. This action constitutes a clear warning from the Kremlin against proposals to utilize immobilized Russian sovereign funds to support Ukraine.
According to reports in local state media, the monetary authority filed a claim last week for approximately 18 trillion roubles. This sum corresponds to the stated $230 billion claim.
EU leaders are set to determine in the coming days regarding a proposal to leverage around €210 billion in frozen Russian state funds. This scheme involves providing Ukraine with a substantial loan to fund its military and financial stability.
The vast majority of these funds, amounting to €185 billion, are held at the Euroclear depository in Brussels. Euroclear acts as the primary custodian for the Kremlin's frozen financial reserves.
EU officials have maintained that their plan is on solid legal ground. They argue is based on the fact that ownership of the sovereign wealth still belongs to Russia, despite being it was immobilized in European countries following the 2022 military offensive of Ukraine.
Moscow, in contrast, has labeled any utilization of the assets as illegal appropriation. Authorities have threatened reciprocal actions, such as seizing European private investors' assets within Russia.
The head of Russia's sovereign wealth fund, a figure who has taken on a prominent role in peace negotiations, stated on a social media platform that Russia "will win in court" and regain its funds. He added that the EU, the euro, and Euroclear "will face consequences" from the plan.
With statements seen as an effort to drive a wedge between Europe and the United States, the official characterized the assets plan as "a severe assault on property rights and the international reserves system established by the United States."
Euroclear refused to comment on the latest lawsuit. The institution has in the past noted it is contending with more than 100 lawsuits in Russian courts.
Although courts in European nations are not expected to enforce judgments from Russian tribunals, experts anticipate Moscow to seek enforcement in countries with stronger relations to the Kremlin.
"Russian monetary authorities 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 located," commented a legal expert from an NSP law firm.
European authorities said they are working on steps to deter other countries from assisting any Russian lawsuits against European entities. They are also designing protections to shield EU member states with assets in Russia from what they term "illegal expropriation."
According to the complex plan, the EU would issue an first €90 billion loan to Ukraine, using the proceeds generated from the immobilized assets at Euroclear. Importantly, Russia's ownership claim on the underlying funds would remain unaffected.
Ukraine would only be obligated to return the loan if and when Russia consented to pay compensation for the immense destruction inflicted during the ongoing war.
Belgium, backed by Italy, Bulgaria, and Malta, has urged the EU to consider an different approach for financing Ukraine. This entails common EU borrowing to secure a loan, using unused funds within the EU budget.
Such a proposal, however, demands full agreement among all 27 member states. Hungary's government, considered aligned with the Kremlin, has already expressed its opposition.
Commenting on Monday, the EU top diplomat, a senior official, said the reparations loan as "the strongest option" for aiding Ukraine. "This mechanism is secured against the Russian immobilized funds, meaning it is not drawn from our public funds, which is equally important," she stated. "Furthermore, it sends a clear message that if you do all this destruction to another country, you must pay for the reparations."
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