🔗 Share this article Moscow Demands Substantial Sum in Compensation against Clearing House over Seized Funds The Russian central bank has announced it is pursuing damages totaling $230 billion from the financial institution Euroclear. This move constitutes a clear warning from the Kremlin regarding proposals to utilize frozen Russian sovereign assets to aid Ukraine. The Financial Lawsuit According to accounts in Russian state media, the central bank initiated a lawsuit last week for roughly 18 trillion roubles. This figure corresponds to the aforementioned $230 billion claim. EU leaders are set to determine in the coming days on a proposal to leverage approximately €210 billion in frozen Russian state funds. This scheme involves providing Ukraine with a substantial loan to fund its military and financial stability. Most of these assets, amounting to €185 billion, are stored at the Euroclear clearing house in Brussels. This institution serves as the main keeper for the Kremlin's immobilised financial reserves. Divergent Legal Views European Union officials have argued that their proposal is on solid legal ground. Their position is based on the fact that title of the state assets still belongs to Russia, despite being it was frozen in EU countries shortly after the 2022 military offensive of Ukraine. Moscow, in contrast, has labeled any use of the assets as illegal appropriation. It has warned of retaliatory measures, such as seizing EU corporate holdings within Russia. The head of Russia's sovereign wealth fund, who has taken on a prominent role in diplomatic talks, wrote on X that Russia "will prevail in court" and retrieve its funds. He warned that the European Union, the common currency, and Euroclear "will face consequences" from the plan. Geopolitical Maneuvering In comments interpreted as an attempt to create division between Europe and the United States, the official characterized the proposal as "a severe attack on the right to ownership and the international reserves system established by the United States." Euroclear declined to comment on the new lawsuit. The institution has previously noted it is facing over 100 legal cases in Russian courts. Legal Hurdles Ahead Although judges in European nations are not expected to recognize judgments from Russian courts, analysts anticipate Moscow to pursue enforcement in countries with stronger ties to the Kremlin. "The Bank of Russia could try to implement 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," commented a lawyer from an international firm. European Safeguards EU officials indicated they are working on measures to deter other nations from aiding any Russian lawsuits against EU entities. They are also crafting protections to protect EU member states with assets in Russia from what they call "illegal expropriation." The Proposed Loan Mechanism Under the complex plan, the EU would provide an first €90 billion loan to Ukraine, using the cash generated from the immobilized assets at Euroclear. Critically, Russia's ownership claim on the underlying funds would remain unaffected. Ukraine would only be required to return the loan if and when Russia agreed to pay reparations for the immense destruction inflicted 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 EU countries. The Hungarian government, considered friendly with the Kremlin, has already signaled its objection. Commenting on Monday, the EU foreign policy chief, Kaja Kallas, described the proposed loan scheme as "the most credible option" for aiding Ukraine. "This mechanism is secured against the Russian frozen assets, meaning it is not drawn from our taxpayers' money, which is also significant," she stated. "Furthermore, it delivers a clear message that when you cause all this damage to another country, you must pay for the reparations."