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Russia's monetary authority has stated it is claiming damages amounting to $230 billion from the securities depository Euroclear. This action constitutes a direct response by the Kremlin against plans to use frozen Russian state assets to support Ukraine.

The Legal Claim

According to accounts in Russian news outlets, the central bank initiated a claim last week for roughly 18 trillion roubles. This figure is equivalent to the aforementioned $230 billion claim.

EU leaders will decide later this week regarding a plan to leverage around €210 billion in immobilized Russian assets. This scheme involves granting Ukraine with a substantial loan to fund its defence and economic needs.

The vast majority of these assets, amounting to €185 billion, reside at the Euroclear depository in Brussels. This institution acts as the main custodian for the Kremlin's frozen sovereign wealth.

Divergent Legal Views

European Union authorities have maintained that their proposal is on solid legal ground. Their position is based on the principle that title of the state assets still belongs to Russia, even though it was immobilized in European jurisdictions shortly after the full-scale military offensive of Ukraine.

The Russian government, however, has called any utilization of the assets as illegal appropriation. It has warned of retaliatory actions, such as confiscating European private investors' assets within Russia.

Kirill Dmitriev, a figure who has assumed a prominent position in diplomatic talks, wrote on X that Russia "will prevail in court" and retrieve its assets. He warned that the EU, the common currency, and Euroclear "will face consequences" from the proposal.

Wider Implications

In comments seen as an attempt to create division between Europe and the United States, the official described the proposal as "a severe assault on the right to ownership and the global financial system created by the United States."

The clearing house declined to comment on the new legal action. The institution has in the past stated it is contending with over 100 legal cases in Russian jurisdictions.

Legal Hurdles Ahead

While judges in EU countries are unlikely to enforce rulings from Russian tribunals, experts expect Moscow to pursue implementation in countries with stronger ties to the Kremlin.

"Russian monetary authorities could try to enforce a Russian court's decision against Euroclear in countries such as China, Hong Kong, the UAE, Kazakhstan, and other sympathetic nations, provided that relevant assets can be identified," stated a lawyer from an international firm.

European Safeguards

European authorities indicated they are developing measures to discourage other countries from aiding any Russian lawsuits against EU entities. They are also designing safeguards to protect EU member states with investments in Russia from what they call "illegal expropriation."

The Proposed Loan Mechanism

Under the detailed plan, the EU would provide an first €90 billion loan to Ukraine, backed by the proceeds generated from the frozen assets at Euroclear. Critically, Russia's legal claim on the underlying funds would stay untouched.

Kyiv would only be required to repay the loan in the event that Russia agreed to pay reparations for the vast destruction inflicted during the ongoing conflict.

Other Funding Ideas

The Belgian government, supported by Italy, Bulgaria, and Malta, has asked the EU to consider an alternative approach for funding Ukraine. This involves common EU debt issuance to secure a loan, backed by unallocated funds within the European budget.

Such a proposal, however, demands unanimity among all 27 EU countries. Hungary's government, viewed as aligned with the Kremlin, has already expressed its opposition.

Speaking on Monday, the EU foreign policy chief, Kaja Kallas, described the reparations loan as "the most credible option" for supporting Ukraine. "The reparations loan is secured against the Russian frozen assets, meaning it is not drawn from our public funds, which is also important," she remarked. "Furthermore, it delivers a powerful message that when you cause all this damage to another country, you have to pay for the reparations."