The Russian Federation has taken a pose
The Central Bank announced the presence of a «negotiating position» for the return of blocked reserves. Russia's argument about blocking private investment in our assets is opposed to the «freezing» of our country's state reserves in the West. To a certain extent, this is indeed a restraining position, but unequal in strength, says TeleTrade analyst Vladimir Kovalev.
The Bank of Russia is working on the return of frozen reserves, said the head of the Central Bank of the Russian Federation Elvira Nabiullina.
“We continue to work to return our reserves in euros and dollars. In particular, the presidential decree introduced restrictions on the withdrawal of funds from Russia by non-residents from unfriendly countries. This is a retaliatory measure, and it forms the negotiating position on this issue,” she said.
It is believed that about $300 billion of Russian reserves fell under the sanctions. Meanwhile, according to analysts, the West managed to find only $80-100 billion.
“If circumstances allowed, European and American institutions would probably confiscate those holdings of Russia's gold and foreign exchange reserves that they could identify. Despite the risks of corresponding responses from Russia in relation to the money of private investors,” says Vladimir Kovalev.
According to him, this is not being done for two main reasons. First, there are no truly legal mechanisms; such precedents and legal grounds are simply absent in legislation and practice. And the second is that confiscation, even if some new legal basis is brought under it, will violate the very principles of reservation between countries, trust in this global institution, its reliability in the eyes of the whole world.
“This is already can cause tectonic shifts in the very basis of international financial relations, he emphasizes. — It will undermine not only the reservation, which is very important for the finances of many countries, but also, in principle, investment, debt markets. If there are certain grounds for the confiscation of state assets at the initiative of borrowers, then the very possibility of such investments for investors is undermined. The losses from this will be much greater even for the initiators themselves than the hypothetical gain from the alienation of Russian reserves.”
The analyst is convinced that, in principle, the possibility of unblocking these assets after the end of the conflict between Russia and Ukraine remains. Although, for now, of course, we are not talking about this.