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Russia's monetary authority has announced it is pursuing damages amounting to $230 billion from the securities depository Euroclear. This action is a direct response from the Kremlin regarding plans to utilize immobilized Russian state assets to support Ukraine.

The Financial Lawsuit

According to reports in local state media, the monetary authority filed a claim last week for approximately 18 trillion roubles. This figure corresponds to the aforementioned $230 billion claim.

EU leaders will decide later this week on a plan to leverage around €210 billion in frozen Russian assets. This scheme entails providing Ukraine with a large loan to finance its defence and economic stability.

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

A Clash Over Legality

European Union authorities have maintained that their proposal is legally sound. They argue is based on the principle that ownership of the state assets remains with Russia, despite being it was immobilized in European countries shortly after the full-scale military offensive of Ukraine.

Moscow, in contrast, has called any utilization of the assets as theft. Authorities have warned of reciprocal actions, including confiscating EU private investors' holdings within Russia.

The head of Russia's sovereign wealth fund, who has assumed a prominent role in peace negotiations, stated on a social media platform that Russia "will prevail in court" and retrieve its funds. He added that the EU, the euro, and Euroclear "will face consequences" from the proposal.

Strategic Positioning

In comments interpreted as an attempt to create division between Europe and the United States, the official described the assets plan as "a vicious attack on the right to ownership and the international reserves system created by the United States."

The clearing house declined to comment on the new legal action. It has previously stated it is facing over 100 legal cases in Russian courts.

Enforcement Challenges

While courts in European nations are not expected to enforce rulings from Russian courts, experts expect Moscow to pursue enforcement in countries with closer relations to the Kremlin.

"The Bank of Russia may attempt to enforce a Russian legal ruling against Euroclear in jurisdictions like China, Hong Kong, the UAE, Kazakhstan, and other friendly states, provided that relevant holdings can be identified," stated a legal expert from an international firm.

EU Countermeasures

EU officials indicated they are working on measures to deter other nations from assisting any Russian legal action against European entities. They are also designing safeguards to protect EU member states with investments in Russia from what they call "unlawful expropriation."

The Proposed Loan Mechanism

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

Ukraine would solely be obligated to repay the loan if and when Russia agreed to pay compensation for the immense damage caused during the ongoing conflict.

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 borrowing to secure a loan, backed by unused funds within the European budget.

This alternative move, however, requires unanimity among all 27 member states. The Hungarian government, considered aligned with the Kremlin, has already expressed its opposition.

Commenting on Monday, the EU top diplomat, Kaja Kallas, said the proposed loan scheme as "the strongest option" for supporting Ukraine. "This mechanism is based on the Russian frozen assets, meaning it is not drawn from our public funds, which is also significant," she stated. "It also delivers a powerful signal that when you cause all this damage to another country, you have to pay for the rebuilding."