🔗 Share this article Russia Seeks Significant Amount in Damages against Euroclear over Frozen Funds Russia's monetary authority has announced it is claiming compensation valued at $230 billion from the financial institution Euroclear. This action represents a clear warning from the Kremlin against plans to use frozen Russian sovereign funds to aid Ukraine. The Legal Claim Based on reports in local news outlets, the monetary authority initiated a lawsuit last week for an estimated 18 trillion roubles. This sum corresponds to the stated $230 billion claim. European Union officials will decide later this week on a proposal to leverage around €210 billion in immobilized Russian assets. The proposal involves providing Ukraine with a substantial loan to fund its defence and financial stability. The vast majority of these assets, amounting to €185 billion, are stored at the Euroclear depository in Brussels. Euroclear serves as the main custodian for the Russian frozen sovereign wealth. Divergent Legal Views EU officials have argued that their plan is on solid legal ground. Their position rests on the fact that title of the state assets still belongs to Russia, even though it was frozen in EU jurisdictions shortly after the full-scale invasion of Ukraine. The Russian government, in contrast, has called any utilization of the funds as theft. It has warned of retaliatory measures, such as confiscating EU corporate assets within Russia. The head of Russia's sovereign wealth fund, who has assumed a prominent position in peace negotiations, wrote on a social media platform that Russia "will prevail in court" and regain its assets. He warned that the EU, the common currency, and Euroclear "will suffer" from the plan. Wider Implications In comments seen as an effort to drive a wedge between Europe and the United States, the official characterized the assets plan as "a severe attack on the right to ownership and the global financial system established by the United States." Euroclear declined to provide a statement on the new legal action. The institution has in the past noted it is contending with more than 100 legal cases in Russian jurisdictions. Enforcement Challenges Although judges in European nations are not expected to enforce judgments from Russian courts, analysts anticipate Moscow to pursue implementation in nations with closer relations to the Kremlin. "The Bank of Russia could try to implement a Russian legal ruling against Euroclear in jurisdictions like China, Hong Kong, the UAE, Kazakhstan, and other sympathetic states, if such holdings can be located," stated a lawyer from an NSP law firm. European Safeguards European authorities indicated they are working on measures to discourage other countries from assisting any Russian lawsuits against European companies. Additionally, they are designing protections to shield EU countries with assets in Russia from what they call "unlawful expropriation." The Proposed Loan Mechanism According to the complex scheme, the EU would provide an first €90 billion loan to Ukraine, backed by the proceeds earned from the frozen assets at Euroclear. Critically, Russia's ownership claim on the principal funds would remain unaffected. Kyiv would only be required to return the loan if and when Russia agreed to pay compensation for the vast damage inflicted during the ongoing war. Alternative Proposals The Belgian government, backed by Italy, Bulgaria, and Malta, has asked the EU to examine an different approach for funding Ukraine. This entails joint EU borrowing to secure a loan, backed by unused funds within the European budget. Such a proposal, however, requires full agreement among all 27 EU countries. The Hungarian government, considered friendly with the Kremlin, has previously expressed its opposition. Speaking on Monday, the EU foreign policy chief, Kaja Kallas, described the reparations loan as "the most credible option" for aiding Ukraine. "This mechanism is based on the Russian immobilized funds, which means it is not drawn from our taxpayers' money, which is also significant," she remarked. "Furthermore, it sends a powerful message that when you do all this damage to another country, you have to pay for the reparations."