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The Russian central bank has declared it is claiming compensation totaling $230 billion from the securities depository Euroclear. This move constitutes a direct response from the Kremlin regarding plans to use immobilized Russian state assets to support Ukraine.

The Legal Claim

According to accounts in Russian news outlets, the monetary authority initiated a claim last week for approximately 18 trillion roubles. This amount is equivalent to the stated $230 billion demand.

EU leaders are set to determine later this week regarding a plan to use around €210 billion in frozen Russian assets. The proposal entails granting Ukraine with a large loan to finance its military and economic needs.

The vast majority of these assets, totaling €185 billion, reside 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 authorities have argued that their plan is legally sound. They argue rests on the principle that ownership of the sovereign wealth remains with Russia, even though it was frozen in EU countries following the full-scale military offensive of Ukraine.

Moscow, however, has labeled any use of the assets as illegal appropriation. Authorities have threatened retaliatory actions, including seizing EU private investors' holdings within Russia.

The head of Russia's sovereign wealth fund, who has taken on a key position in peace negotiations, wrote on X that Russia "will win in court" and regain its assets. He warned that the European Union, the euro, and Euroclear "will face consequences" from the proposal.

Strategic Positioning

In comments interpreted as an effort to create division between Europe and the United States, Dmitriev characterized the assets plan as "a severe attack on the right to ownership and the global financial system established by the United States."

Euroclear refused to comment on the latest legal action. It has in the past stated it is facing over 100 legal cases in Russian courts.

Legal Hurdles Ahead

Although courts in EU countries are unlikely to recognize rulings from Russian tribunals, analysts expect Moscow to pursue implementation in nations with closer relations 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, if such holdings can be located," stated a legal expert from an international firm.

EU Countermeasures

EU officials said they are working on measures to discourage other nations from assisting any Russian lawsuits against EU companies. Additionally, they are designing protections to protect EU countries with assets in Russia from what they call "unlawful expropriation."

How the Funding Would Work

Under the complex scheme, the EU would provide an first €90 billion loan to Ukraine, backed by the proceeds earned from the frozen assets at Euroclear. Importantly, Russia's legal claim on the principal funds would stay untouched.

Ukraine would only be obligated to repay the money if and when Russia agreed to pay reparations for the vast damage inflicted during the nearly four-year war.

Alternative Proposals

Belgium, backed by Italy, Bulgaria, and Malta, has urged the EU to consider an alternative approach for financing Ukraine. This involves common EU debt issuance to fund a loan, backed by unused funds within the European budget.

Such a proposal, nevertheless, demands full agreement among all 27 EU countries. Hungary's government, considered aligned with the Kremlin, has previously expressed its objection.

Commenting on Monday, the EU foreign policy chief, a senior official, said the proposed loan scheme as "the strongest option" for supporting Ukraine. "The reparations loan is secured against the Russian immobilized funds, meaning it doesn't come from our public funds, which is also important," she remarked. "Furthermore, it sends a powerful signal that if you do all this damage to another country, you have to pay for the rebuilding."