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The Russian central bank has declared it is claiming compensation amounting to $230 billion against the securities depository Euroclear. This action is a direct response from the Kremlin regarding proposals to utilize immobilized Russian state assets to support Ukraine.

The Financial Lawsuit

According to reports in local state media, the central bank filed a lawsuit last week for roughly 18 trillion roubles. This sum is equivalent to the stated $230 billion claim.

EU leaders are set to determine in the coming days on a plan to use approximately €210 billion in immobilized Russian assets. This scheme involves providing Ukraine with a large loan to finance its defence and financial stability.

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

A Clash Over Legality

European Union authorities have maintained that their proposal is legally sound. Their position rests on the principle that ownership of the state assets still belongs to Russia, even though it was frozen in EU jurisdictions following the full-scale military offensive of Ukraine.

The Russian government, however, has called any utilization of the assets as illegal appropriation. It has warned of reciprocal actions, such as seizing European corporate holdings within Russia.

Kirill Dmitriev, a figure who has assumed a prominent position in diplomatic talks, stated on X that Russia "will win in court" and regain its assets. He warned that the EU, the euro, and Euroclear "will face consequences" from the proposal.

Geopolitical Maneuvering

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

Euroclear refused to provide a statement on the new lawsuit. The institution has previously noted it is contending with over 100 legal cases in Russian jurisdictions.

Legal Hurdles Ahead

Although judges in EU countries are unlikely to recognize rulings from Russian courts, analysts expect Moscow to seek implementation in nations with closer ties to the Kremlin.

"The Bank of Russia could try to implement a Russian court's decision against Euroclear in jurisdictions like China, Hong Kong, the UAE, Kazakhstan, and other friendly states, if such assets can be located," stated a legal expert from an international firm.

European Safeguards

European authorities indicated they are working on steps to deter other countries from assisting any Russian lawsuits against EU companies. They are also crafting safeguards to protect EU countries with investments in Russia from what they call "illegal expropriation."

How the Funding Would Work

Under the detailed scheme, the EU would provide an initial €90 billion loan to Ukraine, backed by the proceeds generated from the immobilized assets at Euroclear. Critically, Russia's legal claim on the underlying funds would stay untouched.

Kyiv would only be obligated to return the money in the event that Russia consented to pay compensation for the immense damage caused during the ongoing war.

Alternative Proposals

Belgium, supported by Italy, Bulgaria, and Malta, has asked the EU to consider an different method for financing Ukraine. This involves joint EU borrowing to secure a loan, using unallocated funds within the EU budget.

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

Commenting on Monday, the EU foreign policy chief, a senior official, described the reparations loan as "the most credible solution" for aiding Ukraine. "The reparations loan is based on the Russian immobilized funds, meaning it is not drawn from our public funds, which is equally important," she remarked. "Furthermore, it sends a powerful signal that when you cause all this damage to another nation, you have to pay for the reparations."