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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 clear response by the Kremlin against plans to use immobilized Russian state assets to support Ukraine.

The Substantial Demand

According to accounts in Russian state media, the central bank initiated a lawsuit last week for approximately 18 trillion roubles. This figure corresponds to the stated $230 billion demand.

EU leaders are set to determine in the coming days regarding a plan to leverage approximately €210 billion in immobilized Russian state funds. The proposal entails granting Ukraine with a substantial loan to finance its defence and financial needs.

The vast majority of these assets, totaling €185 billion, reside at the Euroclear depository in Brussels. Euroclear serves as the primary custodian for the Russian frozen sovereign wealth.

Dispute on Ownership

European Union authorities have maintained that their plan is on solid legal ground. Their position rests on the principle that ownership of the sovereign wealth remains with Russia, despite being 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 reciprocal measures, such as confiscating EU corporate holdings within Russia.

The head of Russia's sovereign wealth fund, who has assumed a prominent position in peace negotiations, stated on a social media platform that Russia "will prevail in court" and retrieve its funds. He added that the EU, the euro, and Euroclear "will suffer" from the plan.

Geopolitical Maneuvering

With statements seen as an attempt to create division between Europe and the United States, Dmitriev described the proposal as "a severe attack on the right to ownership and the international reserves system created by the United States."

The clearing house declined to comment on the new lawsuit. It has in the past noted it is facing over 100 lawsuits in Russian jurisdictions.

Legal Hurdles Ahead

Although judges in EU countries are not expected to recognize rulings from Russian tribunals, experts expect Moscow to seek implementation in nations with stronger relations to the Kremlin.

"Russian monetary authorities could try to implement a Russian legal ruling against Euroclear in jurisdictions like China, Hong Kong, the UAE, Kazakhstan, and other sympathetic nations, if relevant holdings can be identified," commented a lawyer from an international firm.

European Safeguards

EU officials said they are developing measures to discourage other countries from assisting any Russian legal action against EU entities. They are also crafting protections to protect EU countries with assets in Russia from what they term "unlawful expropriation."

How the Funding Would Work

According to the detailed scheme, the EU would issue an initial €90 billion loan to Ukraine, backed by the cash earned from the immobilized assets at Euroclear. Importantly, Russia's legal claim on the underlying funds would stay unaffected.

Ukraine would only be required to repay the money in the event that Russia agreed to pay compensation for the vast destruction caused during the nearly four-year war.

Alternative Proposals

Belgium, supported by Italy, Bulgaria, and Malta, has asked the EU to consider an alternative method for financing Ukraine. This entails common EU borrowing to secure a loan, backed by unallocated funds within the European budget.

This alternative move, nevertheless, demands unanimity among all 27 member states. The Hungarian government, considered aligned with the Kremlin, has previously signaled its objection.

Speaking on Monday, the EU foreign policy chief, Kaja Kallas, said the proposed loan scheme as "the strongest option" for supporting Ukraine. "This mechanism is based on the Russian immobilized funds, meaning it doesn't come from our taxpayers' money, which is also significant," she remarked. "It also sends a clear message that when you cause all this damage to another nation, you must pay for the rebuilding."