🔗 Share this article Moscow Demands Substantial Sum in Compensation from Euroclear Regarding Frozen Funds The Russian central bank has stated it is claiming compensation totaling $230 billion from the securities depository Euroclear. This move is a direct warning from the Kremlin regarding plans to use frozen Russian sovereign funds to support Ukraine. The Substantial Demand According to accounts in Russian state media, the monetary authority initiated a lawsuit last week for roughly 18 trillion roubles. This sum corresponds to the aforementioned $230 billion claim. EU leaders are set to determine in the coming days regarding a proposal to use approximately €210 billion in frozen Russian assets. This scheme involves providing Ukraine with a large loan to fund its defence and financial stability. The vast majority of these funds, totaling €185 billion, are stored at the Euroclear clearing house in Brussels. Euroclear acts as the main keeper for the Kremlin's frozen sovereign wealth. A Clash Over Legality EU authorities have maintained that their proposal is on solid legal ground. They argue is based on the fact that title of the state assets remains with Russia, despite being it was frozen in European jurisdictions shortly after the full-scale military offensive of Ukraine. The Russian government, in contrast, has called any use of the assets as theft. Authorities have threatened retaliatory actions, including confiscating European corporate holdings within Russia. The head of Russia's sovereign wealth fund, who has taken on a prominent role in diplomatic talks, wrote on a social media platform that Russia "will win in court" and retrieve its assets. He added that the European Union, the euro, 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, Dmitriev characterized the proposal as "a vicious attack on property rights and the international reserves system established by the United States." Euroclear declined to comment on the new legal action. The institution has in the past stated it is contending with more than 100 lawsuits in Russian jurisdictions. Legal Hurdles Ahead While judges in European nations are unlikely to recognize rulings from Russian courts, experts anticipate Moscow to pursue implementation in countries with closer ties to the Kremlin. "Russian monetary authorities could try to enforce a Russian court's decision against Euroclear in jurisdictions like China, Hong Kong, the UAE, Kazakhstan, and other sympathetic states, if such assets can be located," stated a lawyer from an NSP law firm. EU Countermeasures EU officials indicated they are working on measures to deter other nations from assisting any Russian legal action against European companies. Additionally, they are designing protections to shield EU member states with investments in Russia from what they term "unlawful expropriation." The Proposed Loan Mechanism Under the detailed scheme, the EU would issue an first €90 billion loan to Ukraine, backed by the cash generated from the immobilized assets at Euroclear. Importantly, Russia's legal claim on the underlying funds would remain untouched. Ukraine 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 Belgium, supported by Italy, Bulgaria, and Malta, has urged the EU to consider an alternative approach for financing Ukraine. This entails common EU borrowing to fund a loan, using unallocated funds within the EU budget. Such a proposal, nevertheless, demands full agreement among all 27 member states. Hungary's government, viewed as aligned with the Kremlin, has already signaled its opposition. Commenting on Monday, the EU top diplomat, a senior official, said the reparations loan as "the strongest option" for aiding Ukraine. "The reparations loan is based on the Russian immobilized funds, meaning it doesn't come from our public funds, which is equally significant," she stated. "Furthermore, it delivers a clear signal that when you cause all this damage to another country, you have to pay for the rebuilding."