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Russia's monetary authority has stated it is claiming compensation amounting to $230 billion from the securities depository Euroclear. This legal step constitutes a clear warning by the Kremlin against plans to utilize immobilized Russian state assets to support Ukraine.

The Legal Claim

According to accounts in local state media, the central bank initiated a claim last week for an estimated 18 trillion roubles. This amount corresponds to the stated $230 billion demand.

EU leaders are set to determine in the coming days on a plan to use around €210 billion in immobilized Russian state funds. The proposal entails granting Ukraine with a substantial loan to fund its defence and economic needs.

Most of these funds, amounting to €185 billion, reside at the Euroclear clearing house in Brussels. Euroclear serves as the primary custodian for the Russian frozen sovereign wealth.

Divergent Legal Views

EU officials have maintained that their proposal is on solid legal ground. Their position is based on the principle that title of the state assets still belongs to Russia, even though it was immobilized in European countries following 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, including confiscating European corporate assets within Russia.

The head of Russia's sovereign wealth fund, a figure who has assumed 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 European Union, the euro, and Euroclear "will face consequences" from the plan.

Geopolitical Maneuvering

With statements 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."

The clearing house declined to comment on the latest legal action. The institution has previously noted it is contending with more than 100 legal cases in Russian jurisdictions.

Legal Hurdles Ahead

While courts in European nations are not expected to recognize judgments from Russian tribunals, analysts anticipate Moscow to pursue implementation in countries with stronger ties to the Kremlin.

"Russian monetary authorities could try to enforce a Russian legal ruling against Euroclear in jurisdictions like China, Hong Kong, the UAE, Kazakhstan, and other sympathetic states, if such assets can be identified," commented a legal expert from an international firm.

EU Countermeasures

European authorities said they are developing steps to deter other countries from aiding any Russian lawsuits against European companies. They are also crafting protections to shield EU countries with assets in Russia from what they term "illegal expropriation."

How the Funding Would Work

Under the complex plan, the EU would provide an initial €90 billion loan to Ukraine, backed by the cash earned from the immobilized assets at Euroclear. Importantly, Russia's ownership claim on the underlying funds would stay untouched.

Kyiv would solely be required to return the loan if and when Russia agreed to pay compensation for the vast damage inflicted during the nearly four-year conflict.

Other Funding Ideas

Belgium, supported by Italy, Bulgaria, and Malta, has urged the EU to examine an different method for financing Ukraine. This entails joint EU debt issuance to secure a loan, backed by unused funds within the EU budget.

This alternative move, however, requires unanimity among all 27 EU countries. The Hungarian government, viewed as aligned with the Kremlin, has previously signaled its opposition.

Commenting on Monday, the EU top diplomat, a senior official, described the proposed loan scheme as "the most credible option" for supporting Ukraine. "The reparations loan is based on the Russian immobilized funds, meaning it is not drawn from our public funds, which is also significant," she remarked. "It also sends a powerful message that when you cause all this destruction to another country, you must pay for the reparations."