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The Russian central bank has declared it is claiming damages totaling $230 billion from the securities depository Euroclear. This action is a direct response from the Kremlin against proposals to use frozen Russian sovereign assets to support Ukraine.

The Legal Claim

According to reports in Russian state media, the central bank filed a lawsuit last week for an estimated 18 trillion roubles. This amount corresponds to the stated $230 billion demand.

EU leaders are set to determine later this week on a plan to use approximately €210 billion in frozen Russian assets. This scheme entails providing Ukraine with a substantial loan to fund its defence and financial needs.

Most of these assets, totaling €185 billion, are stored at the Euroclear depository in Brussels. This institution serves as the primary keeper for the Russian immobilised financial reserves.

Dispute on Ownership

European Union officials have argued that their plan is on solid legal ground. They argue is based on the fact that title of the sovereign wealth still belongs to Russia, even though it was frozen in European countries shortly after the full-scale military offensive of Ukraine.

The Russian government, however, has called any use of the assets as illegal appropriation. Authorities have warned of reciprocal measures, such as seizing EU corporate holdings within Russia.

Kirill Dmitriev, a figure who has taken on a key position in diplomatic talks, wrote on X that Russia "will win in court" and regain its assets. He added that the EU, the euro, and Euroclear "will face consequences" from the plan.

Geopolitical Maneuvering

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

Euroclear declined to provide a statement on the latest lawsuit. It has in the past stated it is contending with more than 100 legal cases in Russian jurisdictions.

Legal Hurdles Ahead

Although courts in European nations are unlikely to enforce judgments from Russian courts, experts anticipate Moscow to seek implementation in countries 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 nations, provided that such assets can be located," commented a lawyer from an international firm.

European Safeguards

European authorities said they are developing measures to discourage other countries from aiding any Russian lawsuits against EU entities. They are also designing safeguards to shield EU countries with assets 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 frozen assets at Euroclear. Critically, Russia's legal claim on the underlying funds would remain unaffected.

Kyiv would solely be obligated to repay the loan in the event that Russia consented to pay reparations for the vast destruction inflicted during the ongoing conflict.

Alternative Proposals

The Belgian government, supported by Italy, Bulgaria, and Malta, has urged the EU to examine an alternative method for financing Ukraine. This entails joint EU borrowing to fund a loan, using unallocated funds within the EU budget.

This alternative move, however, requires unanimity among all 27 member states. The Hungarian government, considered friendly with the Kremlin, has previously expressed its objection.

Commenting on Monday, the EU foreign policy chief, a senior official, described the reparations loan as "the strongest option" for aiding Ukraine. "The reparations loan is based on the Russian immobilized funds, meaning it is not drawn from our taxpayers' money, which is also important," she stated. "Furthermore, it delivers a powerful signal that if you cause all this damage to another country, you must pay for the reparations."