Russia’s central bank has strongly criticized European Union plans to use Russian state assets frozen in Europe, calling the move illegal and a violation of international law. The warning comes as the EU moves closer to keeping billions of dollars’ worth of Russian central bank funds frozen indefinitely, clearing the way for the money to be used to support Ukraine potentially.
Since the start of the war in Ukraine, Western countries have frozen a large portion of Russia’s foreign reserves held overseas. A significant share of these assets is located in Europe, mainly held by Euroclear, a Belgium-based financial services company that settles and holds securities for global investors. The total amount of Russian assets frozen globally is estimated at around $300 billion.
The European Union is now exploring ways to use these frozen funds to help finance Ukraine’s future needs, particularly for the years 2026 and 2027. According to plans outlined by the European Commission earlier this month, one option would allow EU authorities to borrow against the cash balances generated by frozen Russian central bank assets. The borrowed funds could then be used to issue loans to Ukraine, described as reparations-related financing.
Russia’s central bank has rejected these plans outright. It has been stated that any direct or indirect use of its assets without permission is unlawful and contravenes international law. The bank argues that such actions violate the principle of sovereign immunity, which protects state-owned assets from being seized or used by other countries.
In response, the Russian central bank has taken legal action against Euroclear in a Moscow court. It claims that the firm’s actions have harmed Russia by restricting its ability to access, manage, or dispose of its own funds and securities. While Euroclear, the Belgian government, and the European Commission have not publicly responded to the lawsuit, legal experts say the case is unlikely to have much practical impact within the European Union.
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Russian Court Ruling In The EU
According to Evgeny Kovalyov, a lawyer at Russian law firm Delcredere, the lawsuit is largely symbolic. He explained that enforcing a Russian court ruling in the EU would be extremely difficult. Instead, Russia may attempt to pursue claims in jurisdictions it considers friendly, particularly in countries where European companies or financial institutions hold assets that could be targeted.
The dispute highlights growing tensions between Russia and the EU over the legal boundaries of sanctions and asset freezes. While freezing assets is a common tool used in international sanctions, permanently seizing or using those assets is far more controversial. Many legal experts say it risks setting a precedent that could undermine trust in global financial systems, especially for countries that hold reserves in foreign currencies or institutions.
Russian officials have warned that any move to use frozen assets will trigger what they describe as the harshest reaction. The central bank has said it will challenge EU actions through multiple legal channels, including national courts, foreign judicial authorities, international organizations, and arbitration tribunals. It has also indicated that it would seek enforcement of any favorable rulings across United Nations member states.
In addition to legal action, Russian authorities have hinted at possible retaliatory measures. Kovalyov noted that Russia could expand mechanisms allowing the confiscation of private assets owned by EU citizens and companies within Russia. Such measures already exist in limited form and were introduced in response to Western sanctions.
Former Russian President Dmitry Medvedev has previously stated that Russia itself holds around $300 billion worth of frozen foreign assets in special C-type accounts. These accounts were created after Western sanctions were imposed and contain assets belonging to investors from what Russia calls unfriendly countries. These assets include shares in Russian companies, corporate and government bonds, as well as cash and income generated from those investments.
The standoff over frozen assets adds another layer of complexity to an already strained relationship between Russia and the European Union. While EU leaders argue that using Russian funds is a justified response to the economic damage caused by the war in Ukraine, Russia maintains that such actions break long-standing international legal norms.
As the EU moves closer to formalizing its plans, the issue is likely to escalate further, with legal battles, diplomatic tensions, and potential economic retaliation shaping the next phase of the conflict beyond the battlefield.
