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The Russian central bank has stated it is claiming damages amounting to $230 billion from the securities depository Euroclear. This move represents a clear response from the Kremlin regarding plans to utilize frozen Russian sovereign assets to support Ukraine.

The Legal Claim

Based on reports in Russian state media, the monetary authority filed a lawsuit last week for approximately 18 trillion roubles. This amount corresponds to the stated $230 billion demand.

European Union officials will determine later this week on a proposal to leverage around €210 billion in immobilized Russian assets. The proposal entails granting Ukraine with a substantial loan to finance its military and economic needs.

The vast majority of these funds, totaling €185 billion, are held at the Euroclear clearing house in Brussels. This institution acts as the primary keeper for the Russian frozen sovereign wealth.

A Clash Over Legality

EU officials have maintained that their plan is legally sound. They argue is based on the fact that title of the state assets remains with Russia, despite being it was frozen in EU jurisdictions shortly after the full-scale military offensive of Ukraine.

Moscow, in contrast, has labeled any use of the assets as illegal appropriation. It has warned of reciprocal measures, such as confiscating European private investors' holdings within Russia.

Kirill Dmitriev, a figure who has taken on a key role in diplomatic talks, wrote on X that Russia "will win in court" and retrieve its funds. He warned that the European Union, the common currency, and Euroclear "will face consequences" from the proposal.

Strategic Positioning

In comments seen as an effort to create division between Europe and the United States, the official described the assets plan as "a severe attack on the right to ownership and the international reserves system created by the United States."

Euroclear declined to provide a statement on the latest lawsuit. The institution has in the past noted it is contending with more than 100 lawsuits in Russian jurisdictions.

Enforcement Challenges

Although judges in EU countries are not expected to recognize rulings from Russian courts, experts expect Moscow to seek implementation in nations with closer ties to the Kremlin.

"The Bank of Russia could try to implement a Russian court's decision against Euroclear in jurisdictions like China, Hong Kong, the UAE, Kazakhstan, and other friendly nations, if such assets can be identified," commented a lawyer from an NSP law firm.

European Safeguards

EU officials said they are working on measures to discourage other nations from aiding any Russian legal action against EU companies. Additionally, they are crafting protections to protect EU countries with assets in Russia from what they call "illegal expropriation."

How the Funding Would Work

According to the complex plan, the EU would provide an initial €90 billion loan to Ukraine, using the proceeds earned from the immobilized assets at Euroclear. Critically, Russia's legal claim on the principal funds would remain untouched.

Kyiv would only be obligated to repay the loan in the event that Russia consented to pay compensation for the vast destruction caused during the nearly four-year conflict.

Other Funding Ideas

Belgium, supported by Italy, Bulgaria, and Malta, has asked the EU to examine an alternative method for funding Ukraine. This involves common EU borrowing to fund a loan, using unallocated funds within the EU budget.

This alternative move, however, requires unanimity among all 27 member states. Hungary's government, viewed as aligned with the Kremlin, has already signaled its objection.

Speaking on Monday, the EU foreign policy chief, Kaja Kallas, said the reparations loan as "the most credible option" for aiding Ukraine. "This mechanism is secured against the Russian immobilized funds, which means it is not drawn from our public funds, which is also important," she remarked. "It also sends a clear message that when you do all this damage to another nation, you have to pay for the reparations."