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Russia's monetary authority has announced it is claiming damages totaling $230 billion from the financial institution Euroclear. This legal step is a clear response by the Kremlin regarding plans to use immobilized Russian state assets to support Ukraine.

The Financial Lawsuit

According to reports in Russian state media, the central bank filed a lawsuit last week for roughly 18 trillion roubles. This figure corresponds to the stated $230 billion claim.

EU leaders will decide later this week regarding a proposal to use approximately €210 billion in immobilized Russian state funds. The proposal involves granting Ukraine with a large loan to fund its defence and economic needs.

The vast majority of these funds, amounting to €185 billion, are held at the Euroclear depository in Brussels. Euroclear serves as the main custodian for the Kremlin's frozen sovereign wealth.

Dispute on Ownership

EU officials have maintained that their plan is legally sound. They argue rests on the principle that ownership of the state assets still belongs to Russia, even though it was frozen in European jurisdictions shortly after the full-scale military offensive of Ukraine.

Moscow, however, has called any use of the assets as theft. It has threatened retaliatory actions, including confiscating EU corporate assets within Russia.

Kirill Dmitriev, a figure who has taken on a prominent role in diplomatic talks, wrote on a social media platform that Russia "will prevail in court" and retrieve its assets. He added that the EU, the euro, and Euroclear "will suffer" from the plan.

Wider Implications

In comments interpreted as an attempt to create division between Europe and the United States, Dmitriev described the assets plan as "a severe assault on property rights and the international reserves system established by the United States."

The clearing house declined to comment on the latest lawsuit. It has previously noted it is facing more than 100 lawsuits in Russian jurisdictions.

Enforcement Challenges

While courts in EU countries are unlikely to recognize rulings from Russian tribunals, analysts expect Moscow to pursue enforcement in countries with stronger relations to the Kremlin.

"Russian monetary authorities may attempt to implement a Russian court's decision against Euroclear in countries such as China, Hong Kong, the UAE, Kazakhstan, and other sympathetic nations, provided that relevant holdings can be located," stated a legal expert from an international firm.

EU Countermeasures

EU officials said they are developing measures to discourage other nations from assisting any Russian legal action against European entities. They are also crafting protections to shield EU member states with assets in Russia from what they call "unlawful expropriation."

The Proposed Loan Mechanism

Under the detailed plan, the EU would issue an first €90 billion loan to Ukraine, using the proceeds earned from the frozen assets at Euroclear. Importantly, Russia's legal claim on the underlying funds would stay unaffected.

Ukraine would solely be obligated to repay the loan if and when Russia consented to pay compensation for the immense damage caused during the ongoing war.

Alternative Proposals

The Belgian government, backed by Italy, Bulgaria, and Malta, has asked the EU to examine an alternative method for financing Ukraine. This entails common EU borrowing to secure a loan, backed by unused funds within the EU budget.

Such a proposal, nevertheless, requires full agreement among all 27 EU countries. The Hungarian government, viewed as friendly with the Kremlin, has already signaled its opposition.

Commenting on Monday, the EU top diplomat, a senior official, described the reparations loan as "the strongest option" for supporting Ukraine. "This mechanism is based on the Russian frozen assets, which means it doesn't come from our taxpayers' money, which is also significant," she stated. "It also sends a clear message that when you cause all this destruction to another country, you have to pay for the reparations."