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Russia's monetary authority has declared it is seeking damages amounting to $230 billion from the securities depository Euroclear. This move constitutes a clear warning from the Kremlin regarding proposals to use immobilized Russian sovereign assets to support Ukraine.

The Substantial Demand

Based on accounts in Russian state media, the monetary authority initiated a claim last week for approximately 18 trillion roubles. This amount corresponds to the aforementioned $230 billion claim.

EU leaders are set to decide in the coming days regarding a proposal to leverage approximately €210 billion in frozen Russian assets. This scheme entails granting Ukraine with a substantial loan to finance its military and economic needs.

The vast majority of these funds, amounting to €185 billion, reside at the Euroclear depository in Brussels. This institution serves as the primary keeper for the Russian frozen sovereign wealth.

Dispute on Ownership

EU authorities have maintained that their plan is legally sound. They argue is based on the fact that title of the state assets still belongs to Russia, even though it was immobilized in EU jurisdictions shortly after the full-scale invasion of Ukraine.

The Russian government, however, has called any use of the assets as illegal appropriation. Authorities have warned of retaliatory measures, such as seizing EU private investors' assets within Russia.

Kirill Dmitriev, a figure who has taken on a prominent role in diplomatic talks, stated on X that Russia "will win in court" and retrieve its funds. 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 described the proposal as "a vicious assault on property rights and the global financial system created by the United States."

The clearing house refused to comment on the latest lawsuit. The institution has previously stated it is contending with more than 100 legal cases in Russian jurisdictions.

Legal Hurdles Ahead

Although judges in EU countries are not expected to recognize rulings from Russian tribunals, experts anticipate Moscow to seek enforcement in nations with closer 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 friendly nations, provided that such assets can be identified," commented a legal expert from an NSP law firm.

EU Countermeasures

EU officials indicated they are developing measures to deter other countries from assisting any Russian lawsuits against EU companies. Additionally, they are crafting protections to protect EU member states with investments in Russia from what they term "illegal expropriation."

How the Funding Would Work

According to the complex plan, the EU would provide an initial €90 billion loan to Ukraine, using the cash earned from the frozen assets at Euroclear. Critically, Russia's ownership claim on the underlying funds would stay unaffected.

Kyiv would solely be required to return the money if and when Russia agreed to pay compensation for the immense damage inflicted during the ongoing conflict.

Alternative Proposals

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

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

Commenting on Monday, the EU top diplomat, a senior official, described the proposed loan scheme as "the strongest solution" for supporting Ukraine. "The reparations loan is based on the Russian frozen assets, meaning it is not drawn from our public funds, which is also important," she stated. "It also sends a clear signal that when you cause all this destruction to another nation, you must pay for the rebuilding."