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The Russian central bank has declared it is seeking damages amounting to $230 billion against the securities depository Euroclear. This action is a direct response by the Kremlin against proposals to use immobilized Russian state assets to support Ukraine.

The Substantial Demand

According to reports in Russian state media, the monetary authority filed a lawsuit last week for approximately 18 trillion roubles. This sum corresponds to the stated $230 billion demand.

EU leaders will determine in the coming days on a plan to leverage approximately €210 billion in frozen Russian state funds. The proposal entails providing Ukraine with a substantial loan to fund its defence and financial needs.

Most of these assets, amounting to €185 billion, are stored at the Euroclear depository in Brussels. This institution acts as the primary custodian for the Russian immobilised sovereign wealth.

Dispute on Ownership

European Union authorities have argued that their proposal is legally sound. Their position is based on the principle that title of the state assets still belongs to Russia, even though it was frozen in EU countries following the 2022 invasion of Ukraine.

The Russian government, in contrast, has called any use of the assets as theft. Authorities have threatened retaliatory actions, including seizing EU private investors' assets within Russia.

Kirill Dmitriev, who has taken on a key position in diplomatic talks, wrote on X that Russia "will win in court" and regain its assets. He added that the European Union, the common currency, and Euroclear "will suffer" from the plan.

Strategic Positioning

In comments seen as an effort to create division between Europe and the United States, the official characterized the proposal 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 new legal action. The institution has previously stated it is facing more than 100 lawsuits in Russian courts.

Legal Hurdles Ahead

While courts in EU countries are not expected to enforce judgments from Russian tribunals, analysts anticipate Moscow to seek implementation in countries with stronger relations to the Kremlin.

"Russian monetary authorities could try to enforce a Russian legal ruling against Euroclear in countries such as China, Hong Kong, the UAE, Kazakhstan, and other sympathetic states, provided that such assets can be located," commented a legal expert from an international firm.

EU Countermeasures

EU officials said they are developing steps to deter other countries from aiding any Russian lawsuits against EU companies. They are also crafting protections to shield EU countries with investments in Russia from what they call "illegal expropriation."

How the Funding Would Work

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

Ukraine would solely be required to return the loan if and when Russia agreed to pay compensation for the vast destruction caused during the ongoing conflict.

Alternative Proposals

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

Such a proposal, nevertheless, requires unanimity among all 27 member states. The Hungarian government, considered friendly with the Kremlin, has previously expressed its opposition.

Commenting on Monday, the EU foreign policy chief, a senior official, said the proposed loan scheme as "the most credible solution" for supporting Ukraine. "This mechanism is secured against the Russian frozen assets, which means it is not drawn from our taxpayers' money, which is also important," she remarked. "Furthermore, it delivers a powerful message that when you do all this destruction to another nation, you have to pay for the reparations."