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Russia's monetary authority has announced it is claiming damages totaling $230 billion against the securities depository Euroclear. This move constitutes a direct warning by the Kremlin against proposals to use immobilized Russian state assets to aid Ukraine.

The Substantial Demand

According to accounts in local news outlets, the monetary authority filed a claim last week for roughly 18 trillion roubles. This amount corresponds to the aforementioned $230 billion claim.

European Union officials will determine later this week regarding a proposal to use around €210 billion in frozen Russian assets. The proposal entails providing Ukraine with a substantial loan to finance its defence and financial needs.

Most of these funds, amounting to €185 billion, reside at the Euroclear depository in Brussels. Euroclear serves as the main keeper for the Russian frozen sovereign wealth.

Dispute on Ownership

EU officials have maintained that their plan is on solid legal ground. Their position is based on the fact that ownership of the sovereign wealth still belongs to Russia, even though it was frozen in EU jurisdictions shortly after the full-scale military offensive of Ukraine.

Moscow, in contrast, has labeled any utilization of the funds as theft. It has threatened reciprocal actions, including confiscating EU private investors' holdings 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 assets. He added that the European Union, the euro, and Euroclear "will suffer" from the plan.

Wider Implications

With statements interpreted as an effort to drive a wedge between Europe and the United States, the official described the assets plan as "a vicious assault on property rights and the international reserves system established by the United States."

Euroclear refused to provide a statement on the new legal action. The institution has previously noted it is facing more than 100 lawsuits in Russian jurisdictions.

Legal Hurdles Ahead

Although courts in EU countries are not expected to enforce rulings from Russian courts, experts anticipate Moscow to seek implementation in nations with stronger ties to the Kremlin.

"The Bank of Russia could try to implement a Russian legal ruling against Euroclear in jurisdictions like China, Hong Kong, the UAE, Kazakhstan, and other friendly states, if relevant holdings can be located," commented a legal expert from an international firm.

European Safeguards

European authorities said they are working on measures to deter other nations from assisting any Russian legal action against European companies. They are also designing safeguards to shield EU member states with assets in Russia from what they term "unlawful expropriation."

How the Funding Would Work

Under the complex scheme, the EU would issue an initial €90 billion loan to Ukraine, using the cash generated from the immobilized assets at Euroclear. Critically, Russia's legal claim on the principal funds would remain untouched.

Kyiv would solely be required to repay the loan in the event that Russia agreed to pay reparations for the immense damage inflicted during the ongoing conflict.

Alternative Proposals

Belgium, backed by Italy, Bulgaria, and Malta, has asked the EU to examine an alternative method for funding Ukraine. This involves common EU debt issuance to secure a loan, using unallocated funds within the EU budget.

This alternative move, nevertheless, requires unanimity among all 27 EU countries. Hungary's government, considered aligned with the Kremlin, has previously signaled its objection.

Speaking on Monday, the EU foreign policy chief, a senior official, described the proposed loan scheme as "the strongest solution" for supporting Ukraine. "This mechanism is based on the Russian frozen assets, which means it doesn't come from our public funds, which is also important," she remarked. "Furthermore, it delivers a clear signal that if you do all this damage to another nation, you must pay for the rebuilding."