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Russia's monetary authority has stated it is claiming damages totaling $230 billion against the securities depository Euroclear. This move is a clear response from the Kremlin against proposals to use immobilized Russian state assets to aid Ukraine.

The Substantial Demand

According to reports in local news outlets, the central bank filed a lawsuit last week for roughly 18 trillion roubles. This sum corresponds to the aforementioned $230 billion demand.

EU leaders are set to determine later this week regarding a plan to leverage approximately €210 billion in frozen Russian state funds. This scheme involves providing Ukraine with a large loan to fund its military and financial needs.

Most of these funds, amounting to €185 billion, reside at the Euroclear clearing house in Brussels. This institution acts as the primary custodian for the Russian frozen financial reserves.

Dispute on Ownership

European Union authorities have maintained that their proposal is on solid legal ground. Their position is based on the fact that ownership of the state assets still belongs to Russia, even though it was immobilized in EU countries following the full-scale invasion of Ukraine.

Moscow, in contrast, has labeled any utilization of the funds as illegal appropriation. It has threatened reciprocal actions, including seizing European corporate assets within Russia.

The head of Russia's sovereign wealth fund, who has taken on a prominent role in diplomatic talks, stated on a social media platform that Russia "will win in court" and regain its funds. He added that the European Union, the euro, and Euroclear "will face consequences" from the proposal.

Strategic Positioning

With statements seen as an attempt to create division between Europe and the United States, Dmitriev described the proposal as "a severe assault on property rights and the global financial system created by the United States."

Euroclear refused to comment on the latest lawsuit. The institution has in the past stated it is contending with over 100 legal cases in Russian courts.

Enforcement Challenges

While courts in European nations are not expected to enforce rulings from Russian courts, experts expect Moscow to pursue enforcement in countries with closer ties to the Kremlin.

"The Bank of Russia could try to enforce a Russian court's decision against Euroclear in jurisdictions like China, Hong Kong, the UAE, Kazakhstan, and other friendly nations, provided that such assets can be identified," stated a legal expert from an international firm.

European Safeguards

European authorities said they are developing steps to discourage other nations from assisting any Russian lawsuits against EU companies. Additionally, they are designing protections to protect EU countries with investments in Russia from what they term "unlawful expropriation."

The Proposed Loan Mechanism

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. Importantly, Russia's ownership claim on the underlying funds would stay unaffected.

Ukraine would solely be required to return the money in the event that Russia consented to pay compensation for the immense damage caused during the ongoing war.

Other Funding Ideas

The Belgian government, supported by Italy, Bulgaria, and Malta, has urged the EU to consider an different method for funding Ukraine. This involves joint EU borrowing to secure a loan, using unused funds within the European budget.

This alternative move, nevertheless, demands full agreement among all 27 member states. Hungary's government, considered aligned with the Kremlin, has already signaled its opposition.

Speaking on Monday, the EU top diplomat, Kaja Kallas, said the proposed loan scheme as "the most credible option" for supporting Ukraine. "The reparations loan is based on the Russian frozen assets, meaning it doesn't come from our public funds, which is also significant," she remarked. "It also sends a powerful message that when you cause all this destruction to another nation, you have to pay for the rebuilding."