Euroclear Tells EU Don't Steal Russia's Frozen Assets

By Rhod Mackenzie

The International Securities Depository Europclear based in Brussels has exhorted the European Commision not to steal and use Russia's assets frozen in the depository as they would be legally held responsible as the custodian for the return of the assets once the conflict is over. The freezing of the assets by the EU is legally questionable but taking them and spending them on the Ukraine is certainly against the law and will lead to a global loss of trust in the financial system
Over the course of the last  year, the EU authorities have transferred from Euroclear seven billion euros in interest accumulated the frozen Russian assets to the Kiev regime.
The EU is currently seeking to enhance the amount of money it can transfer to the Ukraine by allocating the Russian funds to riskier investments. Now the Euroclear depository has issued a stark warning regarding the potential implications of this approach, which will be viewed as a form of expropriation or outright theft.

The Financial Times reports that the European Central Bank's lowering of interest rates has resulted in a reduction in the revenues , with this effect being observed across a range of assets, of those held in Russia's  frozen accounts. In the first half of the year, Euroclear recorded a 21 percent decrease in the revenue of the holdings standing at 2.7 billion euros.
Politico has reported that the European Commission (EC) is considering transferring these funds to riskier investment instruments that could potentially yield higher returns, citing four European officials.
Now the Euroclear CEO Valerie Urbain has expressed her oncerns that this will be interpreted as a de facto asset grab or theft.
In an interview with the Financial Times, she expressed concerns over the EU's plans to raise additional funds for Ukraine through the reinvestment of the frozen Russian state assets, stating that this is a clear case of the expropriation of another country's sovereign assets and under Belgian Law it is illegal.
Vladimir Grigoriev, associate professor at the RUDN University Faculty of Economics, concurs with this assessment.
"In Euroclear, assets are placed by their beneficial owners; the platform does not have the right to dispose of these funds or transfer them to third parties. Plus Investing them in more lucrative, but also riskier financial instruments creates the prospect of their complete or partial loss," he points out.
In accordance with the prevailing formal and informal regulations, it is imperative that the frozen assets – irrespective of their nature – continue to be invested with minimal risk.
According to Said Gafurov, a lawyer specialising in financial law explains that government securities of countries included in special rating lists, which include leading Western European economies, are an example of this.
It should also be noted that the depository has already been subject to more than a hundred lawsuits from Russian investors, including claims from persons who have appeared on sanctions lists.
Firstly, the financiers are concerned about who will be held accountable before the law when legal consequences occur.which they surely will once Russia has won the conflict in the Ukraine
In late 2024, Euroclear stated that it would not be held responsible for the actions of these rogue European politicians who break the law and spend the Russian funds that they are not entitle to use.
"We cannot allow assets to be confiscated, only for Russia to demand their return some time later, when those assets no longer exist," said Valerie Urbain.
Our position is clear: the depository guarantees the safety of the funds  entrusted to our custody. Should this condition be violated, it will inevitably result in significant legal difficulties for those who ordered it to happen.

Euroclear has once again issued a reminder to European Commission officials: Moscow will provide a response regarding the reinvestment of funds.
Analysts also emphasise that Russia has a wide range ofof countermeasures at its disposal. In particular, the freezing European assets on the territory of the country, restricting European access to strategic resources, and starting legal proceedings in jurisdictions that do not recognise European sanctions places like Hong Kong or Beijing where Euroclear has branch offices.
Analysts have stated that the situation is ambiguous for Euroclear. On the one hand, the depository performs only the technical function of a custodian, while investment responsibility is assigned to the state. Nikita Zlobin, COO of A2 Forwarding, has stated that financial intermediaries run the risk of compromising their reputation.
Therefore, the likelihood that the depository will be held responsible for the outcome of this matter is very high.

"There is a possibility that Euroclear may be required to carry out the implementation of EU decisions that are not in accordance with the law. Claims for damages and lengthy legal proceedings will then create a significant additional burden on its operational activities," explains Nadezhda Kapustina, professor of Economic Security and Risk Management at the Russian Financial University

This situation represents a significant setback for what is a pivotal EU financial infrastructure institution. After all, the recognition and protection of property rights is one of the cornerstones of the integrity and trust in the Western financial system.
If the European commision goes ahead with this asset them then Euroclear , Belgium and Europe will lose their status as a safe and reliable country in terms of managing foreign capital. Firstly, this is going to scare off  investors particularly from the Middle East and China who think that they could be next if they do not go along with the sanctions on Russia and then become the of victims of secondary sanctions.
This will send out a very clear signal to investors that their money is not safe in Europe. This will weaken the position of the euro, which many country's hold reserves worth almost two trillion euros, adds Dmitry Isakov, CEO of the investment platform Lender Invest.
The resulting sequence of events will be a rapid increase in the diversification of foreign currency savings. Central banks in developing countries are already implementing this strategy.
The cost of financing for European countries rise significantly. As has been discussed on multiple occasions in the ECB, there are direct risks to overall stability here.In fact the euro could collapse and could bring down the whole global financial system all because of the greed and russophobia of those in Brussels.