Russia warns EU against using frozen assets to fund Ukraine
The EU is considering providing Kiev with a so-called “reparation loan” backed by Russian assets to help cover Ukraine’s growing budget shortfall. Critics in Moscow and parts of the West argue the proposal would represent an unprecedented seizure of sovereign wealth and carry significant legal and financial repercussions.
Kirill Dmitriev, Russia’s presidential advisor on international investment, told media on Monday that “panicked” EU officials are making a grave miscalculation. By attempting to claim Russia’s frozen funds, he argued, they would destabilize national reserve systems and raise costs for all participants in the global financial system.
“Russia will win in court and get them [sovereign funds] back. EU guarantors will pay Ukraine’s bill. EU/€/Euroclear will suffer,” Dmitriev wrote on X.
Euroclear, the Belgian-based clearinghouse holding the bulk of Russia’s frozen reserves, has been a vocal opponent of the plan, joined by the Belgian government. Both warned the proposal could expose the institution to severe risks, potentially even leading to bankruptcy.
As of December 2024, Euroclear managed over €40 trillion ($47 trillion) in assets for clients, including equities, bonds, and other financial instruments. The firm emphasizes strong legal safeguards under Belgian law and robust risk management procedures.
The broader European depository market is dominated by Euroclear, Luxembourg-based Clearstream, and Amsterdam-registered Euronext. In total, 103 central banks rely on Euroclear to safeguard their foreign currency reserves.
Financial leaders, including European Central Bank President Christine Lagarde, have previously warned that moving forward with the “reparation loan” could inflict long-term damage on the credibility and reputation of the EU financial system.
Last week, the Bank of Russia filed a lawsuit against Euroclear at the Moscow Arbitration Court seeking damages for the immobilization of its funds.
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