Russia sues Euroclear for $230 billion: frozen assets, sanctions and money for Ukraine

Why is Moscow suddenly counting losses in tens of trillions of rubles?

Russia has announced a lawsuit against one of Europe's key financial hubs — the Belgian depository Euroclear — demanding compensation of almost $230 billion for the frozen assets of its central bank.^{1 2} The move coincided with the EU's decision to make the freeze on Russian reserves virtually indefinite and use the proceeds to support Ukraine, turning the legal dispute into another front in the war.^{3 9} Moscow's attempt to turn the situation around through the courts not only demonstrates the scale of the frozen funds, but also prompts an international debate about the limits of sanctions, sovereign immunity, and the possibility of using foreign assets to compensate for war-related losses.^{1 4} .

What exactly is Russia demanding and why is the amount so large?

According to the Moscow Arbitration Court, the Central Bank of the Russian Federation has filed a lawsuit against the Belgian central depository Euroclear demanding compensation of 18,2 trillion rubles — approximately $229–230 billion — for the inability to dispose of its own funds and securities blocked in the EU after the start of the full-scale invasion of Ukraine.^{1 8} Euroclear, one of the world's largest settlement and clearing centers, holds the lion's share of Russian sovereign assets frozen in the European Union under sanctions, and it is on it that Russia is now trying to place responsibility for the "losses"^{1 4} .

The assessment of claims is based not only on the nominal value of the assets, but also on the unearned income that Moscow considers its right to.⁸ At the same time, according to estimates by the European Commission and specialized publications, a total of approximately €210 billion of assets of the Central Bank of the Russian Federation are blocked in Europe, of which about €185–200 billion is held by Euroclear in Brussels, and another part is held by infrastructure in other EU countries.^{4 6 11} The lawsuit in the Moscow court is seen as a political and legal signal: the Kremlin demonstrates its readiness to use any legal mechanisms to thwart the EU's plans to channel these funds (or at least their profits) to support Ukraine.^{3 9} .

EU decision: indefinite freeze and "reparation loan" for Ukraine

On the eve of the lawsuit, EU countries agreed to effectively freeze the assets of the Russian central bank within the bloc indefinitely, moving away from the practice of six-monthly renewal of sanctions, which required unanimity each time.^{3 9} The new design provides that the decision on further blocking will be made by a qualified majority, which significantly reduces the risk that one or two countries will be able to block the continuation of restrictions, as individual governments have previously tried to achieve, particularly in Central Europe.^{3 11} .

At the center of the discussion is the so-called "reparations loan": the EU plans to use frozen assets as collateral for a large loan in favor of Ukraine, the amount of which could reach tens or even more than a hundred billion euros.^{7 11} . At the same time, the assets themselves are not formally confiscated: on the balance sheets they remain the property of Russia, but the profits from them — the so-called windfall profits (i.e. unexpected additional income from invested funds) — are already directed to the needs of Ukraine, in particular to servicing the joint initiative of the G7 states ERA (Extraordinary Revenue Acceleration — a mechanism for the accelerated use of income from frozen assets).^{6 11} For Moscow, this is an unacceptable precedent — which is why the legal attack on Euroclear looks like an attempt to disrupt or at least complicate the implementation of this scheme.^{2 10} .

Why Euroclear and what role does it play?

Euroclear is a key financial infrastructure hub in Europe, through which settlements for government and corporate securities are made, and also large amounts of reserves of central banks of third countries are stored.^{1 4} It is through this system that Russia has for years placed part of its international reserves in euros and other currencies, taking advantage of access to the developed European capital market.⁴ After the invasion of Ukraine, the EU imposed sanctions that blocked these assets, preserving their formal status — they were not removed from the ownership of the Russian Federation, but access to them was completely restricted.^{3 11} .

Today, according to estimates by European institutions and media, Euroclear holds about €185 billion of the total Russian reserves frozen in the European Union, making the Belgian depository a prime target for both legal attacks and possible Kremlin countermeasures.^{4 7 11} The Russian central bank claims that Euroclear's "illegal actions" have allegedly deprived it of the ability to manage funds and make a profit, while Euroclear itself refrains from public comment, citing confidentiality and strict compliance with EU sanctions regulations.^{1 8} .

Moscow's arguments: sovereign immunity and the EU's "illegal actions"

Russia insists that its central bank's assets enjoy sovereign immunity and therefore cannot be used without the owner's consent, even if it involves sanctions in response to a gross violation of international law.^{5 8} The Central Bank of the Russian Federation in its statements calls the EU plans "illegal" and violating the norms of international law and the principles of the inviolability of state property, including under bilateral agreements on the protection of investments.^{5 13} The Kremlin is betting on the argument that turning frozen reserves into a source of financing for another country is “theft under sanctions” and sets a dangerous precedent for any state that keeps its reserves abroad.

Separately, Russian officials are signaling the possibility of mirror actions — effectively blackmail — that foreign assets that still remain in Russian jurisdiction could be targeted.^{8 13} According to Euroclear, Russia still holds around €16 billion in assets belonging to its clients, and these funds could theoretically be subject to pressure or enforcement measures in response to European decisions.⁸ Thus, the lawsuit in Moscow is not only a legal step, but also an element of a broader strategy to deter the EU from expanding the use of frozen reserves in favor of Ukraine.

EU position: "speculative" and without prospects outside of Russia

European institutions have already responded to the Russian lawsuits, calling the claims "speculative" and legally unfounded outside the Russian legal system.^{3 9} Brussels understands that the Moscow arbitration decision will most likely be in favor of the Russian Central Bank, but according to European lawyers, it will be extremely difficult or impossible to enforce in EU jurisdictions.^{3 11} .

For any Russian decision to be valid in Europe, a mechanism for recognizing decisions of foreign courts is needed, and it is either limited or actually blocked due to sanctions and political confrontation.^{3 9} Moreover, the idea of ​​using the proceeds from frozen assets to support Ukraine has already received political and regulatory support in the EU, including changes to regulations and special legal structures that should minimize the risk of international lawsuits against individual member states.^{7 11 12} .

How the "super profits" mechanism works and why the Kremlin is afraid of it

The EU is fundamentally avoiding direct confiscation of frozen Russian assets, at least at this stage. Instead, it is about using excess profits: interest accrued on cash balances, as well as proceeds from the redemption of securities, which are then reinvested.^{6 11 12} According to European experts, these amounts could reach €3–5 billion per year and are already partially used to finance military and macro-financial support for Ukraine.^{6 11} .

The mechanism is designed to formally not touch the “body” of the assets, leaving them on Russia’s balance sheet, but turning the EU into the beneficiary of the proceeds from frozen resources.^{11 12} For the Kremlin, this is a double defeat: first, Moscow loses control over the strategic part of the reserves; second, these same funds, albeit in the form of profit, work against it - they finance the defense and restoration of Ukraine^{6 11} That is why the legal and informational attack on Euroclear becomes an attempt to discredit and stop the deployment of a model that could operate for decades.^{2 10} .

International risks: will confidence in the euro and reserves in the EU suffer?

European regulators recognize that if other states see the EU's actions as a willingness to restrict access to foreign reserves for political reasons, this could undermine confidence in the euro as a reserve currency and in European jurisdictions as a safe haven for assets.^{3 11} That is why Brussels insists on distinguishing between the confiscation of the principal amount and the use of the proceeds from it, emphasizing the exceptional nature of the measures and the unprecedented nature of the Russian Federation's aggression against Ukraine.^{9 12} .

Some experts compare the current situation with previous cases of Iran, Afghanistan, or Libya, where assets were also frozen, but did not become such a large-scale source of long-term financing for third countries.^{11 12} . Today's case of Russia potentially shapes a new practice: the use of the sovereign reserves of an aggressor state to finance the recovery of the victim, which in the future may be applied to other conflicts - and this is what scares both authoritarian regimes and states with vulnerable foreign policies.^{7 11} .

The Ukrainian dimension: why this lawsuit directly concerns Kyiv

For Ukraine, the dispute between Russia and Euroclear is not an abstract legal conflict, but a question of whether the state will receive a stable long-term source of support for years to come.^{6 11} . Already, excess profits from frozen assets are being directed to servicing Ukraine's support instruments under the ERA initiative and other programs, and a new "reparations loan" could provide additional tens of billions of euros for defense and reconstruction.^{7 11 12} Any weakening of this mechanism due to pressure from the Kremlin or court decisions within the EU will directly affect Ukraine's financial stability in the medium and long term.

Kyiv consistently insists that frozen Russian assets should become the basis for future reparations, and that EU legal structures are only the first step towards full-fledged confiscation.^{6 7} Ukrainian diplomats and experts are actively participating in European discussions, explaining that these funds are not “property out of context,” but a direct resource of the aggressor state, which has caused Ukraine hundreds of billions of dollars in losses.^{7 11} In this sense, the lawsuit against Euroclear looks like an attempt by Russia, if not to return the money, then at least to create maximum legal uncertainty in order to make it difficult for Ukraine to raise funds.

What does the Kremlin really want: money, leverage, or chaos?

Even if Moscow realizes the slim chances of actually recovering $230 billion from Euroclear outside of Russia, the lawsuit has several important functions for the Kremlin.^{2 5} First, it is a domestic political signal: the authorities demonstrate that they are “fighting for the country’s money” and do not leave “injustice” unanswered, which is important for the audience, which is gradually feeling the consequences of sanctions.⁵ Secondly, it is a tool for putting pressure on individual EU countries, primarily Belgium, which fears that in the event of unilateral use of assets it may become the target of counterclaims and economic measures.^{4 8} .

Third, it is an attempt to sow doubt in the global financial system: Russia seeks to show other states that their reserves in the EU are supposedly no longer inviolable if the political winds change.^{11 12} Such a narrative is convenient for Moscow, as it allows it to present itself not as an isolated aggressor, but as a “victim of a precedent” that supposedly threatens anyone.^{5 13} The more doubts the EU's international partners have, the easier it is for the Kremlin to seek new economic and political alliances outside the Western system.

What the lawsuit means for the future of sanctions against Russia

Judicial pressure on Euroclear only highlights that frozen reserves have become one of the key strategic tools for influencing Russia^{1 3} . The loss of access to hundreds of billions of euros limits the Kremlin's ability to finance a long war, cover the budget deficit, and support the ruble exchange rate, forcing Moscow to more actively use its gold and yuan reserves, as well as increase its dependence on China and so-called "friendly" regimes.^{4 9 11} The longer assets remain blocked, the harder it will be for the Russian economy to adapt to sanctions pressure without profound structural changes.

For the EU, the current situation is becoming a test of consistency: is the bloc ready not only to continue sanctions, but also to deepen them, using financial instruments to provide real support to Ukraine, despite the risk of legal complications and threats from the Kremlin?^{3 9 12} If the mechanism of super-profits and the “reparations loan” takes root and withstands legal challenges, it will open the way to the formation of a new international norm: the aggressor pays not declaratively “sometime later”, but already during the war, at the expense of its own reserves.^{7 11} .

Possible next steps: from Russian court to international arbitration

In the near future, the Moscow arbitration court will most likely rule in favor of the Central Bank of the Russian Federation, formally recognizing its right to claims against Euroclear for tens of trillions of rubles.^{1 8} Moscow may then try to seek recognition of this decision in other jurisdictions or resort to international arbitration, citing bilateral investment protection agreements with Belgium and other EU countries.^{4 13} However, lawyers warn: given the sanctions context and the nature of the assets as part of sovereign reserves, Russia's chances of success look extremely remote.^{3 9} .

In response, the EU is likely to continue to improve the legal framework for the use of frozen assets: clarifying mechanisms for controlling excess profits, strengthening collective guarantees for the states where the reserves are located, and preparing the ground for future full reparations in favor of Ukraine.^{7 11 12} For Kyiv, it will be key to keep the topic of Russian assets high on the international agenda, preventing it from turning into a purely technical legal dispute between the Kremlin and European institutions.^{6 7} .

Sources

1. Reuters: Russia's central bank seeks $230 billion in damages from Belgium's Euroclear, Moscow court says
2. The Moscow Times: Russia's Central Bank Seeks $230 Billion From Euroclear Over Frozen Assets
3. Euronews: EU dismisses Russia's lawsuit against Euroclear as "speculative" and groundless
4. The New York Times: Russia Sues Holder of Frozen Assets Europe Wants for Ukraine
5. AP News: Russia's Central Bank sues Belgian financial institution as EU mulls using Moscow's frozen assets
6. European Truth: EU to allocate €1.5 billion in proceeds from frozen Russian assets to support Ukraine
7. European Truth: A €70 billion idea – what the EU's new initiative on frozen Russian assets means
8. MarketScreener / Devdiscourse: Russia's central bank seeks $230 billion in damages from Belgium's central securities depository
9. BBC News: EU backs indefinite freeze on Russia's frozen cash ahead of Ukraine loan scheme
10. Meduza / The Moscow Times: Russian Central Bank sues Euroclear as EU advances plan to tap frozen assets for Ukraine
11. BeHorizon: The European Union agreed to indefinitely freeze Russian assets
12. Al Jazeera: EU indefinitely freezes hundreds of billions in Russian funds
13. RT / official statements of the Bank of Russia: Russia makes legal move against Belgium's Euroclear