Financial clearing house Euroclear plans to seize and redistribute about 3 billion euros of frozen Russian funds to compensate Western investors whose assets were confiscated by Moscow in response to Western sanctions. This is revealed in documents seen by "Reuters" and confirmations from sources familiar with the matter.
The amount is part of about 10 billion euros that belong to Russian individuals and entities sanctioned by the European Union after the invasion of Ukraine in 2022. The move marks a new stage in the EU's response and comes after European sanctions rules were changed late last year to allow such compensation payments. The reallocation is a response to actions by the Russian government, which in recent months ordered the seizure of billions of euros from Western investors held in Russian depositories. According to sources familiar with the matter, Euroclear received permission from Belgian authorities in March and notified its clients on April 1.
"We have received permission from the competent authority to unfreeze the compensation amounts and make them available to our participants," Euroclear said in a document. While the measure does not affect the more than 200 billion euros of frozen reserves of the Russian Central Bank, it will reduce the amount of Russian liquidity available in Europe - cash, stocks and bonds that give the EU significant economic leverage over Moscow.
The Russian side did not respond to a request for comment, and the Belgian government declined to comment on the case. Euroclear emphasizes that it enforces the sanctions, but does not make decisions about their form or whether they should be lifted.
Euroclear is a Belgium-based international clearing and settlement system that stores and settles securities transactions - stocks, bonds and government debt - for hundreds of financial institutions around the world. It acts as a third-party trustee, ensuring that the buyer and seller of securities will fulfill their obligations. After Russia's invasion of Ukraine, the EU froze more than 200 billion euros linked to the Russian central bank and private investors, with the majority of these funds held by Euroclear. This puts it at the center of the economic war between the West and Russia - it physically stores huge volumes of Russian assets and, while it does not make political decisions, is a key technical intermediary with a real strategic role.
The decision to compensate Western investors with Russian assets is controversial among experts. According to Jacob Kirkegaard of the Peterson Institute in Washington, such a move is "morally reprehensible" and would signal that the EU is putting business interests above responsibility for Ukraine's reconstruction. Meanwhile, Russian efforts to regain access to frozen assets include about 100 lawsuits against Euroclear. Last year, Moscow responded by seizing 3 billion euros held in a Russian depository controlled by Euroclear to compensate its investors.
Similar actions are also expected from Clearstream - a Luxembourg-based structure, part of the German stock exchange - which will also make more limited payments to Western investors from blocked Russian funds. The case is being seen as an economic "barter" - the exchange of blocked funds in the West for blocked funds in Russia, and comes against the backdrop of Moscow's continued economic isolation and diplomatic stalemate over the war in Ukraine.