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The Russian central bank has declared it is claiming compensation amounting to $230 billion from the securities depository Euroclear. This legal step represents a direct response from the Kremlin against plans to use immobilized Russian state assets to aid Ukraine.

The Financial Lawsuit

According to accounts in Russian state media, the central bank initiated a lawsuit last week for roughly 18 trillion roubles. This sum is equivalent to the aforementioned $230 billion claim.

European Union officials will determine later this week on a proposal to use approximately €210 billion in frozen Russian assets. This scheme involves granting Ukraine with a substantial loan to finance its military and economic needs.

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

Dispute on Ownership

EU officials have maintained that their plan is on solid legal ground. They argue rests on the fact that ownership of the sovereign wealth remains with Russia, even though it was frozen in EU countries following the 2022 military offensive of Ukraine.

Moscow, in contrast, has called any use of the assets as illegal appropriation. It has threatened reciprocal measures, including seizing European private investors' holdings within Russia.

The head of Russia's sovereign wealth fund, a figure who has taken on a key position in diplomatic talks, wrote on a social media platform that Russia "will win in court" and regain its assets. He warned that the EU, the euro, and Euroclear "will face consequences" from the plan.

Geopolitical Maneuvering

In comments interpreted as an effort to create division between Europe and the United States, the official characterized the assets plan as "a severe assault on property rights and the global financial system created by the United States."

The clearing house declined to comment on the latest lawsuit. It has in the past stated it is contending with more than 100 lawsuits in Russian courts.

Legal Hurdles Ahead

While judges in European nations are not expected to enforce judgments from Russian tribunals, experts anticipate Moscow to pursue implementation in nations with closer relations to the Kremlin.

"Russian monetary authorities may attempt to enforce a Russian legal ruling against Euroclear in jurisdictions like China, Hong Kong, the UAE, Kazakhstan, and other friendly states, if relevant assets can be identified," stated a legal expert from an international firm.

European Safeguards

European authorities said they are developing measures to deter other countries from assisting any Russian legal action against EU companies. Additionally, they are crafting safeguards to protect EU countries with assets in Russia from what they call "unlawful expropriation."

How the Funding Would Work

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

Kyiv would solely be required to repay the money in the event that Russia consented to pay compensation for the immense damage inflicted during the ongoing conflict.

Alternative Proposals

The Belgian government, backed by Italy, Bulgaria, and Malta, has urged the EU to consider an different approach for financing Ukraine. This involves common EU debt issuance to fund a loan, backed by unused funds within the EU budget.

This alternative move, however, demands full agreement among all 27 member states. The Hungarian government, viewed as friendly with the Kremlin, has already signaled its opposition.

Speaking on Monday, the EU foreign policy chief, Kaja Kallas, described the proposed loan scheme as "the strongest solution" for aiding Ukraine. "The reparations loan is secured against the Russian immobilized funds, which means it doesn't come from our public funds, which is also important," she stated. "Furthermore, it delivers a clear signal that when you do all this destruction to another country, you must pay for the rebuilding."