Moscow Demands Staggering Amount in Damages from Euroclear Regarding Seized Assets

The Russian central bank has stated it is pursuing compensation amounting to $230 billion from the securities depository Euroclear. This action is a clear response by the Kremlin regarding plans to utilize immobilized Russian state assets to aid Ukraine.

The Substantial Demand

Based on reports in Russian state media, the central bank filed a claim last week for roughly 18 trillion roubles. This figure corresponds to the stated $230 billion claim.

EU leaders are set to decide later this week regarding a proposal to use approximately €210 billion in immobilized Russian state funds. This scheme entails granting Ukraine with a large loan to fund its military and financial stability.

The vast majority of these assets, amounting to €185 billion, are held at the Euroclear clearing house in Brussels. Euroclear serves as the main keeper for the Kremlin's immobilised sovereign wealth.

Divergent Legal Views

EU officials have maintained that their proposal is on solid legal ground. They argue rests on the fact that ownership of the sovereign wealth remains with Russia, even though it was immobilized in European countries shortly after the full-scale invasion of Ukraine.

Moscow, in contrast, has called any use of the funds as theft. Authorities have threatened retaliatory actions, such as seizing European private investors' holdings within Russia.

Kirill Dmitriev, a figure who has assumed a key role in peace negotiations, stated on X that Russia "will win in court" and regain its assets. He warned that the EU, the euro, and Euroclear "will suffer" from the proposal.

Wider Implications

In comments interpreted as an effort to create division between Europe and the United States, the official described the assets plan as "a severe attack on property rights and the international reserves system created by the United States."

The clearing house refused to comment on the new legal action. The institution has previously noted it is facing more than 100 lawsuits in Russian courts.

Legal Hurdles Ahead

While judges in European nations are unlikely to enforce judgments from Russian courts, experts anticipate Moscow to pursue implementation in nations with stronger ties to the Kremlin.

"Russian monetary authorities may attempt to enforce a Russian legal ruling against Euroclear in countries such as China, Hong Kong, the UAE, Kazakhstan, and other sympathetic states, provided that such holdings can be identified," stated a lawyer from an international firm.

EU Countermeasures

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

How the Funding Would Work

Under the complex scheme, the EU would provide an initial €90 billion loan to Ukraine, backed by the proceeds earned from the immobilized assets at Euroclear. Importantly, Russia's legal claim on the underlying funds would remain unaffected.

Kyiv would only be required to return the loan if and when Russia consented to pay compensation for the vast damage caused during the nearly four-year war.

Alternative Proposals

The Belgian government, supported by Italy, Bulgaria, and Malta, has asked the EU to consider an alternative approach for financing Ukraine. This entails joint EU borrowing to secure a loan, backed by unallocated funds within the European budget.

Such a proposal, however, requires unanimity among all 27 member states. The Hungarian government, considered friendly with the Kremlin, has already signaled its opposition.

Speaking on Monday, the EU foreign policy chief, a senior official, described the reparations loan as "the strongest solution" for supporting Ukraine. "This mechanism is secured against the Russian immobilized funds, meaning it doesn't come from our public funds, which is also important," she stated. "Furthermore, it sends a clear signal that if you do all this destruction to another nation, you must pay for the reparations."