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The Russian central bank has stated it is claiming damages amounting to $230 billion from the securities depository Euroclear. This move constitutes a direct response by the Kremlin against proposals to utilize immobilized Russian sovereign assets to aid Ukraine.

The Legal Claim

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

European Union officials will determine in the coming days regarding a plan to use approximately €210 billion in frozen Russian assets. The proposal entails providing Ukraine with a large loan to fund its defence and financial stability.

Most of these assets, totaling €185 billion, are stored at the Euroclear clearing house in Brussels. Euroclear acts as the main keeper for the Kremlin's frozen financial reserves.

A Clash Over Legality

European Union officials have maintained that their proposal is on solid legal ground. Their position rests on the fact that title of the state assets still belongs to Russia, even though it was immobilized in EU jurisdictions shortly after the full-scale invasion of Ukraine.

Moscow, however, has labeled any use of the funds as illegal appropriation. It has threatened retaliatory actions, such as confiscating European private investors' assets within Russia.

Kirill Dmitriev, a figure who has assumed a prominent role in diplomatic talks, wrote on X that Russia "will prevail in court" and regain its assets. He warned that the EU, the euro, and Euroclear "will suffer" from the proposal.

Wider Implications

With statements interpreted as an attempt to create division between Europe and the United States, the official described the proposal as "a severe assault on the right to ownership and the international reserves system created by the United States."

Euroclear declined to provide a statement on the new lawsuit. The institution has in the past noted it is facing more than 100 lawsuits in Russian courts.

Legal Hurdles Ahead

Although courts in EU countries are unlikely to enforce rulings from Russian tribunals, experts expect Moscow to pursue implementation in nations with stronger ties to the Kremlin.

"The Bank of Russia could try 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 assets can be located," commented a legal expert from an NSP law firm.

European Safeguards

European authorities said they are working on steps to deter other countries from aiding any Russian legal action against EU entities. They are also crafting 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 first €90 billion loan to Ukraine, using the cash earned from the immobilized assets at Euroclear. Critically, Russia's legal claim on the principal funds would remain untouched.

Ukraine would only be obligated to repay the money in the event that Russia agreed to pay reparations for the vast destruction caused during the nearly four-year war.

Alternative Proposals

Belgium, backed by Italy, Bulgaria, and Malta, has urged the EU to examine an different approach for funding Ukraine. This entails common EU debt issuance to secure a loan, backed by unallocated funds within the European budget.

Such a proposal, however, demands full agreement among all 27 EU countries. Hungary's government, viewed as aligned with the Kremlin, has previously expressed its opposition.

Commenting on Monday, the EU foreign policy chief, Kaja Kallas, said the reparations loan as "the strongest option" for aiding Ukraine. "This mechanism is based on the Russian immobilized funds, meaning it is not drawn from our taxpayers' money, which is also significant," she remarked. "It also delivers a clear signal that when you do all this destruction to another country, you must pay for the rebuilding."