Russia
The Kremlin is threatening “serious consequences” if there is an unprecedented seizure of Russian assets abroad
Fri Dec 22, 2023 16:04 GMT
The Kremlin has threatened Europe and the United States with “serious consequences,” including financial seizures or even a severance of diplomatic ties, if Russian assets held abroad are used to support Ukraine’s budget and war effort.
A spokesman for Vladimir Putin told reporters on Friday that the Biden administration and European leaders planned to seize Russian central bank assets believed to be more than $300 billion ($236 billion). Billions of pounds) frozen after Moscow launched its all-out invasion of Ukraine in 2019. In February 2022, they should “realize that Russia will never abandon those who do it.”
The New York Times reported Thursday that the Biden administration has begun urgent talks with G7 nations about how to plan the unprecedented seizure of the funds, most of which are believed to be held in Europe, and whether the Funds could be spent directly on Ukrainian military efforts or simply on reconstruction and budget.
Joe Biden is said not to have signed the strategy, the newspaper reported. But discussions have accelerated as Republicans in Congress have blocked a deal to provide new military aid to Ukraine, potentially scrapping the Ukrainian war effort at a desperate moment after a Ukrainian counteroffensive failed to provide a decisive breakthrough in the war.
“The unlawful seizure of our assets remains always on the agenda in both Europe and America,” Putin's spokesman Dmitry Peskov said of reports that the Biden administration is urging European countries to draw up plans for a possible seizure by February, the two-year anniversary comprehensive invasion of Russia. “This problem is unacceptable to us. It is potentially extremely dangerous for the global financial system.”
In an indication that European nations may be ready to join the strategy, prosecutors in Germany said this week that they had requested the seizure of more than 720 million euros (£624 million) from the Frankfurt bank account of a Russian financial institution.
Biden also signed an executive order on Friday that would blacklist banks and other financial institutions that support the Russian defense industry in an effort to starve the Russian war machine of key components such as semiconductors and machine tools.
U.S. Treasury Secretary Janet Yellen said the U.S. “will not hesitate to use this agency’s new tools to take decisive and surgical action.” This would also impact exports of diamonds and seafood, both of which originate in Russia but are largely processed outside the country.
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Russia has warned of the diplomatic consequences of further escalation. Sergei Ryabkov, deputy foreign minister, said he “does not want to dwell on negative scenarios” but suggested that a seizure of assets could serve as a “trigger for a possible outbreak of confrontation, which could potentially lead to a break in relations.”
Other triggers could include “further military escalation,” he said, including the deployment of short- and medium-range missiles in Europe or the Asia-Pacific region.
The Ukrainian government had previously called on its supporters in the West to seize Russian assets to create a reconstruction fund for Ukraine, but the Biden administration refused and Yellen said in 2022 that the seizure was “not legally permissible in the United States.” States” without an act of Congress.
“It is necessary to work on concrete mechanisms to use frozen Russian assets to compensate for the damage caused by Russia,” Ukrainian leader Volodymyr Zelensky said during a meeting of global financial leaders in Washington in April. “It will be a peacemaking act on a global scale. Potential attackers must recognize this and remember that the world can be strong.”
Some European banks, such as the Austrian Raiffeisenbank, continue to operate in Russia. They claim they are being held hostage because the Kremlin says it will not easily allow foreign banks to leave the country.
Putin signed a decree in April authorizing the state to temporarily take control of the assets of foreign companies in Russia in apparent retaliation for freezing Russian assets abroad. Since then, Russia has targeted certain companies that have suspended their activities in Moscow, including brewing company Carlsberg Group and French food conglomerate Danone.
Putin this week ordered shares held by Germany's Wintershall Dea and Austria's OMV in gas and condensate production companies in Siberia to be transferred to Russian companies.
“Both Europeans and Americans are fully aware of the legal consequences this will have for the initiators and executors,” Peskov said of the reported plans to seize Russian assets abroad. “In the end, if someone confiscates something from us, we will see what we can confiscate in return. And if something is found, we will of course take care of it immediately. Therefore, these are steps that must have serious consequences.”
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