Russia Seeks Staggering Amount in Damages from Euroclear Regarding Seized Assets

The Russian central bank has stated it is pursuing damages valued at $230 billion against the securities depository Euroclear. This move represents a direct warning by the Kremlin against proposals to use immobilized Russian sovereign funds to support Ukraine.

The Legal Claim

According to accounts in local state media, the central bank initiated a claim last week for an estimated 18 trillion roubles. This figure corresponds to the stated $230 billion demand.

EU leaders are set to decide later this week on a proposal to use approximately €210 billion in immobilized Russian assets. The proposal entails granting Ukraine with a large loan to fund its military and economic stability.

The vast majority of these funds, totaling €185 billion, are held at the Euroclear depository in Brussels. This institution acts as the primary custodian for the Russian immobilised financial reserves.

Divergent Legal Views

European Union authorities have argued that their plan is legally sound. They argue rests on the principle that title of the state assets still belongs to Russia, even though it was immobilized in European countries following the full-scale military offensive of Ukraine.

The Russian government, in contrast, has called any use of the funds as theft. It has warned of reciprocal measures, such as confiscating EU corporate holdings within Russia.

Kirill Dmitriev, who has assumed a prominent position in peace negotiations, wrote on a social media platform that Russia "will prevail in court" and retrieve its assets. He added that the EU, the common currency, and Euroclear "will suffer" from the proposal.

Strategic Positioning

With statements seen as an attempt to drive a wedge between Europe and the United States, Dmitriev described the assets plan as "a vicious attack on the right to ownership and the international reserves system established by the United States."

Euroclear refused to provide a statement on the latest legal action. It has in the past stated it is facing over 100 legal cases in Russian courts.

Legal Hurdles Ahead

While judges in EU countries are unlikely to enforce rulings from Russian tribunals, experts expect Moscow to seek enforcement in countries with closer relations to the Kremlin.

"The Bank of Russia may attempt to enforce a Russian legal ruling against Euroclear in jurisdictions like China, Hong Kong, the UAE, Kazakhstan, and other sympathetic nations, if relevant assets can be located," stated a legal expert from an international firm.

EU Countermeasures

European authorities indicated they are working on steps to discourage other countries from assisting any Russian legal action against European companies. They are also crafting safeguards to protect EU countries with investments in Russia from what they term "illegal expropriation."

The Proposed Loan Mechanism

Under the detailed plan, the EU would provide an initial €90 billion loan to Ukraine, using the proceeds generated from the immobilized assets at Euroclear. Critically, Russia's ownership claim on the underlying funds would remain unaffected.

Kyiv would only be obligated to repay the money if and when Russia consented to pay compensation for the immense destruction caused during the nearly four-year conflict.

Other Funding Ideas

Belgium, supported by Italy, Bulgaria, and Malta, has asked the EU to consider an different method for financing Ukraine. This involves common EU borrowing to fund a loan, backed by unallocated funds within the European budget.

This alternative move, however, demands full agreement among all 27 member states. Hungary's government, viewed as friendly with the Kremlin, has previously expressed its objection.

Speaking on Monday, the EU foreign policy chief, Kaja Kallas, 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 taxpayers' money, which is equally significant," she stated. "It also sends a powerful signal that if you do all this destruction to another nation, you must pay for the rebuilding."