🔗 Share this article Russia Seeks Substantial Amount in Damages from Euroclear over Frozen Funds The Russian central bank has stated it is seeking damages totaling $230 billion from the securities depository Euroclear. This move is a direct warning from the Kremlin regarding proposals to utilize frozen Russian state assets to support Ukraine. The Legal Claim Based on reports in local state media, the central bank initiated a lawsuit last week for approximately 18 trillion roubles. This figure corresponds to the aforementioned $230 billion claim. European Union officials are set to decide in the coming days on a proposal to leverage around €210 billion in frozen Russian assets. The proposal entails providing Ukraine with a substantial loan to fund its military and economic stability. Most of these assets, amounting to €185 billion, are stored at the Euroclear clearing house in Brussels. This institution acts as the main keeper for the Kremlin's frozen financial reserves. Divergent Legal Views EU authorities have argued that their plan is on solid legal ground. They argue rests on the fact that title of the sovereign wealth still belongs to Russia, despite being it was frozen in EU jurisdictions shortly after the full-scale military offensive of Ukraine. The Russian government, however, has labeled any use of the funds as illegal appropriation. Authorities have warned of reciprocal measures, such as seizing European private investors' assets within Russia. The head of Russia's sovereign wealth fund, who has taken on a prominent role in diplomatic talks, stated on X that Russia "will prevail in court" and regain its assets. He added that the European Union, the euro, and Euroclear "will face consequences" from the proposal. Wider Implications In comments interpreted as an attempt to create division between Europe and the United States, the official characterized the proposal as "a vicious attack on the right to ownership and the global financial system established by the United States." The clearing house refused to comment on the new legal action. The institution has previously noted it is contending with more than 100 lawsuits in Russian jurisdictions. Legal Hurdles Ahead While courts in European nations are not expected to enforce judgments from Russian tribunals, experts expect Moscow to pursue implementation in nations with closer relations to the Kremlin. "Russian monetary authorities may attempt to enforce a Russian court's decision against Euroclear in countries such as China, Hong Kong, the UAE, Kazakhstan, and other friendly states, if such assets can be identified," commented a lawyer from an international firm. EU Countermeasures EU officials said they are developing measures to discourage other countries from assisting any Russian legal action against EU entities. They are also designing safeguards 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 issue an first €90 billion loan to Ukraine, using the proceeds generated from the frozen assets at Euroclear. Critically, Russia's legal claim on the underlying funds would remain unaffected. Kyiv would only be required to return the money if and when Russia consented to pay reparations for the vast damage inflicted during the nearly four-year war. Other Funding Ideas The Belgian government, supported by Italy, Bulgaria, and Malta, has asked the EU to examine an alternative approach for financing Ukraine. This entails joint EU borrowing to fund a loan, using unused funds within the EU budget. Such a proposal, nevertheless, demands full agreement among all 27 EU countries. Hungary's government, viewed as friendly with the Kremlin, has already expressed its opposition. Commenting on Monday, the EU top diplomat, Kaja Kallas, said the proposed loan scheme as "the strongest solution" for supporting Ukraine. "The reparations loan is secured against the Russian immobilized funds, meaning it doesn't come from our public funds, which is equally important," she remarked. "Furthermore, it delivers a powerful signal that when you cause all this destruction to another nation, you must pay for the reparations."