Russia makes legal move against Belgium’s Euroclear
Russia’s central bank has initiated legal proceedings in Moscow against the Belgian clearinghouse Euroclear, in a move that comes as the EU approaches a denouement on plans to use Russia’s frozen funds to back a loan to Ukraine.
Euroclear is the custodian for more than $200 billion in Russian sovereign assets that have been immobilized under EU sanctions.
The Bank of Russia announced on Friday that it will be filing a lawsuit with the Moscow City Arbitration Court. It will seek compensation for damages stemming from its “inability to manage monetary assets and securities” placed with the depository. The precise amount of the claim has not been disclosed.
“We [the government], including the central bank, are doing everything to protect our assets,” Deputy Prime Minister Aleksandr Novak told RT. “Illegal confiscations are absolutely unacceptable.”
Euroclear currently holds around €185 billion ($220 billion) in Russian assets immobilized under Western sanctions. The EU has proposed using the funds as collateral for a so-called “reparation loan” to Ukraine, intended to help cover Kiev’s long-term budget shortfall.
Moscow has condemned the idea as an attempted theft of its property. Euroclear сhief risk officer Guillaume Eliet said in comments to AFP that the firm still holds about €16 billion ($18.8 billion) in client assets in Russia, which could become targets of retaliatory measures for which it would be liable.
The proposal has also faced resistance from both the Belgian government and Euroclear, who are warning of legal and financial risks. Belgian Prime Minister Bart De Wever has cautioned that moving forward would likely trigger prolonged litigation with Russia over what would amount to an unprecedented seizure of a foreign state’s assets. Belgium has insisted that any such risks be shared among multiple countries, ideally including non-EU partners.
Euroclear CEO Valerie Urbain told Belgian broadcaster VRT that the initiative could push the depository toward bankruptcy as well as undermine “the attractiveness of the European market” for foreign investors.
EU officials reportedly intend to change the mechanism for keeping Russian assets immobilized. The current scheme that requires a consensus vote every six months could be replaced on Friday with a more long-term solution that would potentially make the sanction indefinite and protected from a veto by a dissenting member, according to Reuters.
