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Russia's monetary authority has declared it is claiming damages amounting to $230 billion against the financial institution Euroclear. This move is a clear response from the Kremlin regarding proposals to utilize frozen Russian state assets to support Ukraine.

The Financial Lawsuit

According to reports in Russian state media, the monetary authority filed a claim last week for roughly 18 trillion roubles. This sum is equivalent to the stated $230 billion claim.

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

The vast majority of these funds, amounting to €185 billion, are stored at the Euroclear depository in Brussels. This institution acts as the primary keeper for the Russian frozen financial reserves.

Dispute on Ownership

European Union authorities have argued that their proposal is legally sound. Their position is based on the principle that ownership of the sovereign wealth remains with Russia, despite being it was immobilized in European countries following the full-scale invasion of Ukraine.

Moscow, in contrast, has called any use of the funds as theft. Authorities have warned of retaliatory actions, such as confiscating EU private investors' holdings within Russia.

Kirill Dmitriev, who has assumed a prominent position in diplomatic talks, stated on X that Russia "will win in court" and retrieve its assets. He warned that the European Union, the common currency, and Euroclear "will face consequences" from the plan.

Wider Implications

With statements interpreted as an effort to create division between Europe and the United States, the official described the assets plan as "a vicious attack on property rights and the global financial system established by the United States."

The clearing house declined to provide a statement on the new legal action. The institution has previously stated it is facing more than 100 legal cases in Russian courts.

Legal Hurdles Ahead

Although courts in EU countries are not expected to enforce judgments from Russian courts, experts expect Moscow to seek implementation in nations with stronger relations to the Kremlin.

"Russian monetary authorities may attempt to enforce a Russian legal ruling against Euroclear in jurisdictions like China, Hong Kong, the UAE, Kazakhstan, and other friendly states, provided that such holdings can be located," stated a legal expert from an international firm.

EU Countermeasures

European authorities indicated they are developing measures to deter other nations from aiding any Russian legal action against EU companies. Additionally, they are crafting safeguards to protect EU member states with assets in Russia from what they call "illegal expropriation."

How the Funding Would Work

Under the complex scheme, the EU would provide an initial €90 billion loan to Ukraine, backed by the cash earned from the frozen assets at Euroclear. Critically, Russia's ownership claim on the principal funds would remain untouched.

Ukraine would only be required to repay the loan if and when Russia consented to pay reparations for the immense damage caused during the nearly four-year conflict.

Alternative Proposals

The Belgian government, supported by Italy, Bulgaria, and Malta, has urged the EU to consider an different approach for funding Ukraine. This involves common EU borrowing to secure a loan, using unallocated funds within the EU budget.

Such a proposal, nevertheless, demands full agreement among all 27 EU countries. The Hungarian government, viewed as aligned with the Kremlin, has already expressed its objection.

Speaking on Monday, the EU top diplomat, Kaja Kallas, said the proposed loan scheme as "the strongest solution" for supporting Ukraine. "This mechanism is secured against the Russian frozen assets, which means it doesn't come from our public funds, which is also significant," she stated. "Furthermore, it delivers a powerful signal that when you cause all this damage to another country, you must pay for the rebuilding."