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Russia's monetary authority has stated it is claiming damages totaling $230 billion from the financial institution Euroclear. This action represents a direct warning by the Kremlin against plans to utilize immobilized Russian state assets to support Ukraine.

The Legal Claim

Based on accounts in Russian news outlets, the central bank initiated a lawsuit last week for approximately 18 trillion roubles. This figure is equivalent to the stated $230 billion demand.

EU leaders will decide in the coming days regarding a plan to leverage around €210 billion in immobilized Russian state funds. The proposal entails granting Ukraine with a large loan to finance its defence and financial needs.

The vast majority of these funds, amounting to €185 billion, are stored at the Euroclear clearing house in Brussels. This institution serves as the primary custodian for the Kremlin's immobilised sovereign wealth.

Dispute on Ownership

European Union officials have argued that their plan is on solid legal ground. Their position is based on the principle that ownership of the state assets still belongs to Russia, even though it was frozen in EU jurisdictions following the full-scale invasion of Ukraine.

Moscow, in contrast, has labeled any use of the assets as theft. It has threatened retaliatory actions, such as seizing EU corporate holdings within Russia.

The head of Russia's sovereign wealth fund, who has taken on a key role in peace negotiations, wrote on a social media platform that Russia "will win in court" and regain its funds. He warned that the European Union, the common currency, and Euroclear "will face consequences" from the plan.

Geopolitical Maneuvering

In comments interpreted as an attempt to create division between Europe and the United States, Dmitriev characterized the assets plan as "a vicious attack on property rights and the global financial system established by the United States."

The clearing house declined to comment on the new legal action. It has in the past noted it is contending with more than 100 legal cases in Russian jurisdictions.

Legal Hurdles Ahead

While courts in EU countries are unlikely to recognize rulings from Russian courts, analysts anticipate Moscow to pursue implementation in countries with closer ties to the Kremlin.

"The Bank of Russia could try to enforce a Russian court's decision against Euroclear in countries such as China, Hong Kong, the UAE, Kazakhstan, and other friendly states, if relevant holdings can be identified," commented a legal expert from an international firm.

European Safeguards

European authorities said they are working on steps to deter other nations from assisting any Russian lawsuits against European companies. They are also crafting safeguards to protect EU countries with assets in Russia from what they call "illegal expropriation."

The Proposed Loan Mechanism

Under the detailed plan, the EU would provide an initial €90 billion loan to Ukraine, backed by the cash generated from the immobilized assets at Euroclear. Critically, Russia's ownership claim on the underlying funds would stay unaffected.

Ukraine would only be required to return the money in the event that Russia agreed to pay compensation for the immense destruction inflicted during the nearly four-year conflict.

Other Funding Ideas

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

This alternative move, nevertheless, demands unanimity among all 27 member states. Hungary's government, viewed as aligned with the Kremlin, has previously expressed its opposition.

Speaking on Monday, the EU top diplomat, a senior official, said the reparations loan as "the most credible solution" for supporting Ukraine. "This mechanism is secured against the Russian immobilized funds, meaning it is not drawn from our public funds, which is equally important," she remarked. "Furthermore, it delivers a powerful signal that when you cause all this destruction to another country, you have to pay for the rebuilding."