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The Russian central bank has stated it is claiming damages valued at $230 billion against the securities depository Euroclear. This move constitutes a clear response from the Kremlin regarding plans to use immobilized Russian state assets to support Ukraine.

The Financial Lawsuit

Based on reports in Russian news outlets, the central bank filed a lawsuit last week for an estimated 18 trillion roubles. This amount corresponds to the aforementioned $230 billion claim.

European Union officials are set to determine later this week on a proposal to use approximately €210 billion in immobilized Russian assets. This scheme entails granting Ukraine with a substantial loan to finance its military and economic needs.

Most of these funds, totaling €185 billion, are stored at the Euroclear depository in Brussels. This institution serves as the primary keeper for the Kremlin's immobilised sovereign wealth.

Dispute on Ownership

European Union authorities have maintained that their plan is on solid legal ground. They argue rests on the principle that title of the sovereign wealth still belongs to Russia, even though it was immobilized in EU jurisdictions shortly after the full-scale military offensive of Ukraine.

The Russian government, however, has labeled any use of the assets as theft. It has threatened reciprocal actions, including seizing EU corporate assets within Russia.

The head of Russia's sovereign wealth fund, who has assumed a key role in diplomatic talks, stated on a social media platform that Russia "will win in court" and retrieve its assets. He added that the European Union, the common currency, and Euroclear "will suffer" from the proposal.

Strategic Positioning

With statements interpreted as an effort to drive a wedge between Europe and the United States, Dmitriev described the assets plan as "a severe assault on property rights and the global financial system created by the United States."

Euroclear refused to comment on the new legal action. It has previously noted it is facing over 100 legal cases in Russian jurisdictions.

Enforcement Challenges

While judges in EU countries are not expected to recognize judgments from Russian tribunals, analysts expect Moscow to pursue implementation in nations with closer relations to the Kremlin.

"The Bank of Russia could try to implement a Russian court's decision 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 legal expert from an NSP law firm.

European Safeguards

EU officials indicated they are developing measures to discourage other countries from aiding any Russian legal action against EU companies. Additionally, they are designing protections to shield EU member states with assets in Russia from what they term "illegal expropriation."

How the Funding Would Work

According to the detailed scheme, the EU would issue an first €90 billion loan to Ukraine, backed by the cash earned from the immobilized assets at Euroclear. Critically, Russia's legal claim on the underlying funds would stay unaffected.

Ukraine would solely be required to return the money if and when Russia agreed to pay compensation for the vast destruction caused during the ongoing conflict.

Other Funding Ideas

The Belgian government, backed by Italy, Bulgaria, and Malta, has asked the EU to consider an alternative approach for financing Ukraine. This involves common EU debt issuance to secure a loan, using unused funds within the European budget.

This alternative move, however, demands unanimity among all 27 EU countries. Hungary's government, viewed as aligned with the Kremlin, has already expressed its opposition.

Commenting on Monday, the EU top diplomat, a senior official, described the proposed loan scheme as "the strongest option" for aiding Ukraine. "This mechanism is secured against the Russian immobilized funds, meaning it doesn't come from our taxpayers' money, which is equally significant," she stated. "It also sends a clear signal that if you do all this destruction to another country, you must pay for the rebuilding."