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The Russian central bank has stated it is pursuing compensation totaling $230 billion against the securities depository Euroclear. This move represents a clear response by the Kremlin regarding plans to utilize frozen Russian sovereign funds to support Ukraine.

The Legal Claim

Based on reports in Russian state media, the monetary authority filed a lawsuit last week for roughly 18 trillion roubles. This amount is equivalent to the aforementioned $230 billion claim.

EU leaders will decide in the coming days on a plan to use around €210 billion in immobilized Russian assets. The proposal entails providing Ukraine with a substantial loan to finance its defence and financial stability.

Most of these funds, amounting to €185 billion, are held at the Euroclear clearing house in Brussels. Euroclear serves as the main keeper for the Russian frozen sovereign wealth.

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 state assets still belongs to Russia, even though it was immobilized in European countries shortly after the full-scale invasion of Ukraine.

The Russian government, however, has labeled any utilization of the funds as theft. It has warned of reciprocal actions, such as seizing EU private investors' holdings within Russia.

The head of Russia's sovereign wealth fund, who has assumed a prominent position in diplomatic talks, stated on X that Russia "will prevail in court" and regain its assets. He added that the European Union, the euro, and Euroclear "will suffer" from the proposal.

Geopolitical Maneuvering

In comments seen as an effort to drive a wedge between Europe and the United States, Dmitriev described the assets plan as "a vicious attack on the right to ownership and the global financial system established by the United States."

Euroclear refused to comment on the latest lawsuit. The institution has in the past noted it is contending with over 100 lawsuits in Russian courts.

Legal Hurdles Ahead

Although courts in EU countries are unlikely to recognize judgments from Russian courts, analysts anticipate Moscow to pursue enforcement in countries with closer ties to the Kremlin.

"The Bank of Russia may attempt to implement a Russian court's decision against Euroclear in jurisdictions like China, Hong Kong, the UAE, Kazakhstan, and other sympathetic nations, provided that relevant assets can be identified," stated a lawyer from an international firm.

EU Countermeasures

EU officials indicated they are working on measures to deter other nations from assisting any Russian lawsuits against EU companies. They are also crafting safeguards to protect EU countries with assets in Russia from what they call "illegal expropriation."

The Proposed Loan Mechanism

Under the detailed plan, the EU would issue an initial €90 billion loan to Ukraine, using the cash earned from the immobilized assets at Euroclear. Critically, Russia's ownership claim on the principal funds would remain untouched.

Kyiv would solely be obligated to return the money in the event that Russia agreed to pay compensation for the vast damage inflicted during the ongoing conflict.

Alternative Proposals

Belgium, supported by Italy, Bulgaria, and Malta, has urged the EU to consider an different approach for funding Ukraine. This entails joint EU borrowing to secure a loan, using unused funds within the EU budget.

This alternative move, nevertheless, demands unanimity among all 27 member states. The Hungarian government, considered aligned with the Kremlin, has already expressed its opposition.

Speaking on Monday, the EU top diplomat, a senior official, said the proposed loan scheme as "the strongest option" for supporting Ukraine. "The reparations loan is based on the Russian frozen assets, which means it is not drawn from our public funds, which is also important," she remarked. "It also sends a powerful message that if you cause all this damage to another country, you have to pay for the reparations."