Russia Seeks Staggering Amount in Damages from Euroclear over Seized Assets
Russia's monetary authority has announced it is pursuing damages amounting to $230 billion from the securities depository Euroclear. This action represents a direct warning from the Kremlin against plans to use frozen Russian sovereign funds to support Ukraine.
The Legal Claim
Based on reports in local state media, the monetary authority filed a lawsuit last week for an estimated 18 trillion roubles. This amount corresponds to the stated $230 billion claim.
EU leaders will decide later this week on a plan to use around €210 billion in immobilized Russian state funds. This scheme entails granting Ukraine with a substantial loan to fund its military and financial needs.
The vast majority of these assets, totaling €185 billion, are held at the Euroclear depository in Brussels. Euroclear acts as the main custodian for the Kremlin's frozen financial reserves.
Dispute on Ownership
EU authorities have maintained that their proposal is legally sound. They argue rests on the fact that ownership of the sovereign wealth still belongs to Russia, even though it was immobilized in European countries shortly after the 2022 military offensive of Ukraine.
Moscow, however, has labeled any use of the assets as illegal appropriation. Authorities have warned of retaliatory actions, including confiscating EU corporate holdings within Russia.
The head of Russia's sovereign wealth fund, a figure who has taken on a key position in peace negotiations, stated on X that Russia "will prevail in court" and regain its assets. He added that the EU, the euro, and Euroclear "will suffer" from the plan.
Wider Implications
With statements seen as an effort to drive a wedge between Europe and the United States, Dmitriev characterized the proposal as "a vicious assault on property rights and the global financial system created by the United States."
The clearing house refused to provide a statement on the latest legal action. It has in the past noted it is contending with more than 100 legal cases in Russian courts.
Legal Hurdles Ahead
Although courts in European nations are not expected to recognize judgments from Russian courts, analysts anticipate Moscow to pursue enforcement in countries with closer relations to the Kremlin.
"Russian monetary authorities could try to implement a Russian legal ruling against Euroclear in countries such as China, Hong Kong, the UAE, Kazakhstan, and other sympathetic states, if such holdings can be identified," stated a legal expert from an NSP law firm.
EU Countermeasures
European authorities indicated they are developing measures to deter other countries from aiding any Russian lawsuits against European companies. They are also designing safeguards to shield EU member states with investments in Russia from what they term "unlawful expropriation."
How the Funding Would Work
Under the detailed plan, the EU would issue an first €90 billion loan to Ukraine, using the proceeds earned from the immobilized assets at Euroclear. Importantly, Russia's legal claim on the principal funds would remain untouched.
Ukraine would only be required to repay the loan if and when 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 asked the EU to examine an alternative approach for funding Ukraine. This entails joint EU borrowing to secure a loan, using unused funds within the European budget.
This alternative move, however, requires full agreement among all 27 member states. Hungary's government, viewed as aligned with the Kremlin, has previously expressed its opposition.
Commenting on Monday, the EU foreign policy chief, Kaja Kallas, described the reparations loan as "the strongest solution" for aiding Ukraine. "The reparations loan is secured against the Russian immobilized funds, which means it is not drawn from our public funds, which is equally significant," she remarked. "Furthermore, it sends a clear signal that if you do all this destruction to another nation, you must pay for the reparations."