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Russia's monetary authority has stated it is seeking compensation valued at $230 billion from the financial institution Euroclear. This move represents a direct response by the Kremlin against proposals to utilize frozen Russian state funds to aid Ukraine.

The Legal Claim

According to accounts in Russian state media, the monetary authority filed a lawsuit last week for an estimated 18 trillion roubles. This figure corresponds to the stated $230 billion claim.

EU leaders will determine later this week regarding a proposal to leverage approximately €210 billion in immobilized Russian assets. The proposal entails granting Ukraine with a large loan to fund its defence and economic needs.

Most of these funds, totaling €185 billion, are stored at the Euroclear depository in Brussels. This institution serves as the primary keeper for the Russian immobilised sovereign wealth.

Dispute on Ownership

EU authorities have argued that their proposal is on solid legal ground. They argue is based on the fact that title of the sovereign wealth still belongs to Russia, despite being it was frozen in EU countries following the full-scale invasion of Ukraine.

Moscow, however, has called any use of the assets as theft. It has threatened reciprocal actions, such as seizing European corporate 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 funds. He added that the European Union, the euro, and Euroclear "will suffer" from the plan.

Geopolitical Maneuvering

In comments seen as an attempt to drive a wedge between Europe and the United States, the official described the proposal as "a severe assault on property rights and the global financial system established by the United States."

Euroclear declined to provide a statement on the new legal action. It has in the past noted it is contending with over 100 lawsuits in Russian courts.

Legal Hurdles Ahead

Although courts in European nations are unlikely to recognize judgments from Russian courts, experts expect Moscow to seek implementation in countries with closer relations to the Kremlin.

"The Bank of Russia may attempt to enforce a Russian legal ruling against Euroclear in countries such as China, Hong Kong, the UAE, Kazakhstan, and other friendly states, provided that relevant holdings can be located," commented a lawyer from an international firm.

EU Countermeasures

European authorities said they are working on steps to deter other nations from aiding any Russian lawsuits against European entities. Additionally, they are designing protections to protect EU countries with investments in Russia from what they call "unlawful expropriation."

How the Funding Would Work

Under the detailed plan, the EU would issue an initial €90 billion loan to Ukraine, backed by the proceeds generated from the frozen assets at Euroclear. Importantly, Russia's ownership claim on the underlying funds would remain untouched.

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

Alternative Proposals

Belgium, supported by Italy, Bulgaria, and Malta, has urged the EU to examine an different method for financing Ukraine. This involves common EU borrowing to fund a loan, backed by unallocated funds within the European budget.

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

Speaking on Monday, the EU top diplomat, Kaja Kallas, described the reparations loan as "the strongest option" for supporting Ukraine. "This mechanism is secured against the Russian immobilized funds, meaning it doesn't come from our taxpayers' money, which is equally important," she remarked. "It also sends a clear message that when you cause all this destruction to another nation, you have to pay for the reparations."