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The Russian central bank has declared it is seeking damages valued at $230 billion against the securities depository Euroclear. This move constitutes a clear response by the Kremlin regarding proposals to utilize immobilized Russian state funds to support Ukraine.

The Financial Lawsuit

According to reports in local state media, the central bank filed a claim last week for approximately 18 trillion roubles. This amount corresponds to the stated $230 billion claim.

EU leaders are set to determine in the coming days regarding a plan to use approximately €210 billion in immobilized Russian state funds. This scheme entails granting Ukraine with a substantial loan to finance its defence and economic stability.

The vast majority of these assets, amounting to €185 billion, are stored at the Euroclear clearing house in Brussels. This institution acts as the main custodian for the Kremlin's frozen sovereign wealth.

Dispute on Ownership

European Union officials have maintained that their plan is legally sound. They argue rests on the fact that ownership of the sovereign wealth still belongs to Russia, even though it was frozen in European countries following the full-scale invasion of Ukraine.

Moscow, however, has labeled any utilization of the funds as theft. Authorities have threatened reciprocal measures, including confiscating EU private investors' assets within Russia.

Kirill Dmitriev, who has taken on a key role in diplomatic talks, wrote on a social media platform that Russia "will win in court" and regain its funds. He warned that the EU, the common currency, and Euroclear "will face consequences" from the proposal.

Strategic Positioning

In comments interpreted as an attempt to drive a wedge between Europe and the United States, Dmitriev described the proposal as "a severe attack on the right to ownership and the international reserves system established by the United States."

Euroclear refused to provide a statement on the latest legal action. The institution has previously stated it is facing over 100 lawsuits in Russian courts.

Enforcement Challenges

Although judges in European nations are not expected to enforce rulings from Russian courts, experts anticipate Moscow to pursue enforcement in nations with closer ties to the Kremlin.

"The Bank of Russia could try to implement a Russian legal ruling against Euroclear in countries such as China, Hong Kong, the UAE, Kazakhstan, and other sympathetic states, if such holdings can be identified," commented a legal expert from an international firm.

European Safeguards

EU officials said they are working on measures to deter other countries from aiding any Russian legal action against EU entities. They are also designing protections to shield EU countries with assets in Russia from what they term "unlawful expropriation."

The Proposed Loan Mechanism

Under the detailed scheme, the EU would provide an initial €90 billion loan to Ukraine, using the proceeds earned from the immobilized assets at Euroclear. Critically, Russia's legal claim on the underlying funds would remain unaffected.

Ukraine would solely be required to return the money if and when Russia consented to pay compensation for the vast damage inflicted during the ongoing war.

Other Funding Ideas

The Belgian government, supported by Italy, Bulgaria, and Malta, has asked the EU to consider an alternative method for funding Ukraine. This entails joint EU debt issuance to fund a loan, backed by unallocated funds within the European budget.

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

Speaking on Monday, the EU foreign policy chief, a senior official, said the proposed loan scheme as "the most credible solution" for aiding Ukraine. "This mechanism is based on the Russian frozen assets, which means it doesn't come from our public funds, which is also significant," she stated. "It also delivers a clear signal that when you do all this destruction to another country, you must pay for the reparations."