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The Russian central bank has announced it is claiming damages valued at $230 billion from the securities depository Euroclear. This legal step is a clear response by the Kremlin regarding plans to utilize frozen Russian sovereign assets to support Ukraine.

The Legal Claim

Based on reports in local news outlets, the central bank initiated a claim last week for an estimated 18 trillion roubles. This sum corresponds to the stated $230 billion claim.

EU leaders will determine in the coming days on a plan to leverage around €210 billion in frozen Russian assets. This scheme involves providing Ukraine with a substantial loan to finance its military and economic stability.

Most of these assets, totaling €185 billion, reside at the Euroclear clearing house in Brussels. This institution acts as the primary custodian for the Kremlin's frozen financial reserves.

Dispute on Ownership

European Union officials have argued that their proposal is legally sound. Their position rests on the fact that ownership of the state assets still belongs to Russia, despite being it was immobilized in European countries shortly after the full-scale invasion of Ukraine.

Moscow, in contrast, has labeled any use of the funds as illegal appropriation. Authorities have warned of retaliatory actions, including confiscating EU corporate holdings within Russia.

Kirill Dmitriev, a figure who has assumed a key role in diplomatic talks, stated on X that Russia "will win in court" and retrieve its funds. He added that the European Union, the euro, and Euroclear "will suffer" from the proposal.

Wider Implications

In comments interpreted as an effort to create division between Europe and the United States, the official characterized the assets plan as "a severe attack on property rights and the international reserves system established by the United States."

Euroclear refused to provide a statement on the latest lawsuit. The institution has in the past noted it is contending with over 100 legal cases in Russian courts.

Enforcement Challenges

While judges in EU countries are unlikely to recognize judgments from Russian tribunals, experts anticipate Moscow to seek implementation in countries with stronger relations to the Kremlin.

"The Bank of Russia could try to enforce a Russian court's decision against Euroclear in countries such as China, Hong Kong, the UAE, Kazakhstan, and other sympathetic states, if relevant assets can be identified," commented a legal expert from an international firm.

EU Countermeasures

EU officials indicated they are developing measures to discourage other nations from aiding any Russian lawsuits against EU companies. Additionally, they are designing protections to shield EU countries with investments in Russia from what they call "illegal expropriation."

The Proposed Loan Mechanism

Under the complex scheme, the EU would issue an first €90 billion loan to Ukraine, using the proceeds earned from the frozen assets at Euroclear. Critically, Russia's ownership claim on the principal funds would remain unaffected.

Ukraine would solely be obligated to return the loan in the event that Russia consented to pay reparations for the immense destruction caused during the ongoing conflict.

Alternative Proposals

The Belgian government, supported by Italy, Bulgaria, and Malta, has asked the EU to consider an alternative approach for financing Ukraine. This involves common EU borrowing to fund a loan, backed by unallocated funds within the EU budget.

Such a proposal, however, demands full agreement among all 27 EU countries. Hungary's government, considered friendly with the Kremlin, has already signaled its opposition.

Commenting on Monday, the EU foreign policy chief, a senior official, said the reparations loan as "the strongest option" for aiding Ukraine. "The reparations loan is secured against the Russian frozen assets, meaning it is not drawn from our public funds, which is equally significant," she remarked. "It also sends a powerful message that if you do all this damage to another nation, you must pay for the rebuilding."