Russia Sues Holder of Frozen Assets Europe Wants for Ukraine Loan

The lawsuit was a warning to European officials who are racing to agree to a plan to use Russian government assets in Europe to lend money to Ukraine.

Russia’s Central Bank said on Friday that it had filed a lawsuit in Moscow against the Belgium-based depository that holds about 185 billion euros ($217 billion) in immobilized Russian state assets, which European officials are looking to use to extend a giant loan to Ukraine.

The lawsuit, filed in the Moscow City Arbitration Court, was a warning to European officials by the Russian government, which has said it will pursue all legal avenues to stop what President Vladimir V. Putin has called the theft of sovereign assets.

In a statement, Russia’s Central Bank accused the depository, Euroclear, of “unlawful activities” that are denying Moscow access to its funds and securities. The bank said it had filed the lawsuit in part because the European Union’s executive arm was “considering proposals for direct or indirect use of Bank of Russia assets without authorization.”

Euroclear and Belgium’s Foreign Ministry declined to comment.

European leaders are racing to agree to a plan that would allow them to use about €210 billion in Russian government assets frozen in Europe — mainly at Euroclear — to lend money to Ukraine. The topic will dominate the agenda at a meeting of political leaders from the European Union’s 27 member countries that will take place Thursday in Brussels.

Under the plan, Europe would use the frozen assets to back a loan of €90 billion, or about $106 billion, to Ukraine, parceled out over the next two years. Ukraine would need to pay the money back only if Russia paid reparations.

But while the setup would funnel cash to Ukraine — which is expected to begin running out of money to fight the war early next year — it also entails risks. European leaders have argued that the plan is legal because the assets are not being directly seized, but it has been clear for months that Russia does not see it that way and plans to challenge the move and retaliate.

With the lawsuit in Moscow against Euroclear, Russia is signaling that it will follow through on a legal challenge, analysts said.

“A Moscow court cannot force Euroclear to comply, and any ruling would be unenforceable abroad,” said Alexandra Prokopenko, a former Russian Central Bank official and a fellow at the Carnegie Russia Eurasia Center. “But it is not meaningless: It creates formal documentation of Russia’s legal claims and serves as a political signal ahead of international litigation.”

Ms. Prokopenko added that there was also an investment protection agreement between Russia, Belgium and Luxembourg that requires any loss to be compensated, which Moscow could cite in future international arbitration against Belgium.

As a result, Belgium in particular has been worried that it will be on the hook if Russia retaliates legally.

A small nation, Belgium has asked other European countries to share in the risk by providing guarantees backing any loan. And while most of Russia’s frozen assets are held at Euroclear, Belgium is insisting that pots of money elsewhere should also be used in the plan. Smaller sums are held in France and Britain, among other places.

Other European nations, including Germany, have been scrambling to convince Belgium to agree to the plan.

Many argue that Ukraine needs money to be in a strong negotiating position in peace talks. The United States has pulled back support, and European nations are in debt and struggling to ramp up their own military spending, so they have limited room to extend aid from their own budgets.

Bart de Wever, the Belgian prime minister, is visiting London to talk with Britain’s prime minister, Keir Starmer, on Friday. British officials say the two will meet in the afternoon to discuss a range of issues, including the frozen assets.

A draft U.S. peace plan released last month envisioned using the frozen funds for the postwar reconstruction of Ukraine. As a result, their use by European leaders for a loan before a peace deal could cause tension with Washington. But European officials say the alternative is for Ukraine to face a financial crunch, which would further weaken Kyiv’s hand in peace talks.

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