The European Central Securities Depository (Euroclear) plans to use approximately 3 billion euros of Russian funds to compensate Western investors.
According to documents seen by Reuters and people familiar with the matter, after the Russian government seized cash held by Western investors in Russia, Euroclear plans to seize and redistribute around 3 billion euros of Russian funds frozen by this main settlement house in Belgium. Three sources said that the Russian government has seized billions of dollars in cash held by Western investors in Russia in recent months, which will be used to compensate them, escalating efforts by both sides to recover huge amounts of money affected by the Ukraine-Russia war. Two of the sources said that Euroclear will reallocate 3 billion euros from 10 billion euros in cash held by sanctioned Russian entities and individuals since Moscow's invasion of Ukraine in 2022.
This move marks a new height in Europe's retaliation. The EU changed its sanctions regime at the end of last year to allow payments to Western investors in such cases. In the past, Western countries have used the interest from frozen Russian assets to provide loans and payments to Ukraine, which Russian President Vladimir Putin condemned as theft.
The reason for Belgium's plan to pay compensation is that the Russian government ordered the seizure of billions of dollars of funds held by Western investors last year. Euroclear has been under pressure from international investors to make compensation payments. Reuters could not determine which investors would benefit from this compensation.
According to people interviewed by Reuters, Euroclear received permission from Belgium, its main legal body, to make payments in March this year. Euroclear informed clients about the upcoming compensation in a briefing document dated April 1. The document stated: "We have received authorization from the competent authorities to unfreeze the compensation amount and provide it to our participants." Reuters could not identify the owners of the frozen assets.
The Belgian government declined to comment, and the Russian Ministry of Finance did not respond to requests for comment. Euroclear emphasized that it is responsible for enforcing sanctions but does not decide their form or termination. The two aforementioned sources said that the payments to Western investors will not involve the more than 200 billion euros of Russian central bank reserves frozen in the EU.
However, this will reduce almost all of the Russian wealth reserves held by Euroclear, including cash, stocks, and bonds, giving the EU greater influence over Moscow. Some hope that frozen Russian assets can be used to rebuild Ukraine. Western investors have hundreds of billions of assets stuck in Russia, including seized factories and cash.
After the full-scale invasion of Ukraine by Russia in February 2022, the EU froze thousands of billions of Russian assets, including Russian central bank reserves, an unprecedented move and the largest punishment against Russia by the EU. Euroclear holds the vast majority of Russia's sanctioned wealth in Europe—over 180 billion euros.
One source said that recovering this money is very important for Moscow, prompting the court to take about 100 actions against Euroclear. Reuters could not determine the status of these court cases. Russia warned last year that it would retaliate if its frozen assets were seized and used for Ukraine, and amended its laws earlier this year to allow such action.
Two sources said that in recent months, Moscow authorities have seized 3 billion euros in cash held by one of Euroclear's deposit-taking institutions in Russia to compensate Russian investors affected by Western sanctions.
Clearstream, a branch of Deutsche Börse, like Euroclear, stores securities such as stocks and bonds for traders. A person familiar with the matter said that this Luxembourg-based company will also pay similar amounts to Western investors from frozen Russian cash, albeit on a smaller scale. The amount involved is several hundred million euros. Clearstream declined to comment.
Two sources said this is equivalent to Moscow initiating an exchange, using frozen Western funds in Russia for frozen Russian cash in Europe.
Original Source: https://www.toutiao.com/article/1831026054164611/
Disclaimer: This article solely represents the author's personal views.