Experts spoke about Moscow's possible steps in response to the unfriendly actions of the West
The European Union does not intend to transfer income from its blocked assets to Russia even after the sanctions against our country are lifted. This is directly stated in the EU Council resolution on the expropriation of income from the reinvestment of Russian assets to finance arms supplies to Kyiv. The day before, the EU approved the decision to seize income from Russian assets in favor of Ukraine and even outlined what it was going to send and where. The Russian authorities have repeatedly promised to respond harshly to such unfriendly actions. Experts told MK what the Kremlin’s symmetrical actions on the decisions of a united Europe could be.
Let us recall that after the start of the special operation in Ukraine at the end of February 2022, the EU and the G7 countries froze almost half of Russian foreign exchange reserves amounting to about 300 billion euros. About 200 billion euros are in the EU, and most of this amount is in the accounts of the Belgian Euroclear, one of the world's largest settlement and clearing systems. Almost from the beginning of the CVO, the authorities of Western countries began to openly declare that they could seize the Russian assets they had and transfer them to Ukraine. For a long time, heads of state and governments of unfriendly countries could not come up with a single solution. However, at the end of April this year, US President Joe Biden signed a bill providing for his authority to confiscate Russian assets in America for the needs of the reconstruction of Ukraine, and for this he would not even need congressional approval.
European politicians very quickly joined their American partners. The Council of Europe stated that even after the lifting of sanctions against Russia, the European authorities will not return income from blocked assets to our country. And on May 23, a decision on the use of income from frozen Russian sovereign assets will come into force in the EU. It involves directing 90% of the income received by depositories from Russian assets held by Europeans to the EU budget to provide military assistance to Kyiv, as well as to EU programs for the restoration of Ukraine. Central depositories will be able to keep another 10% in case of their own potential risks, but this amount remains in the EU.
The Russian authorities have said many times that in the event of such actions, Moscow’s decisions will be just as tough. Foreign Minister Sergei Lavrov stated back in March that our country would respond in the same way if its frozen assets were confiscated in the West. Prior to this, in December, Russian Finance Minister Anton Siluanov spoke in the same vein and recalled the possible withdrawal of foreigners’ funds in type “C” accounts, where about 280 billion rubles are located.
Similar statements were made in the State Duma. Last year, the speaker of the lower house of parliament, Vyacheslav Volodin, called the West’s actions “theft of assets” and also promised a symmetrical response. According to Mikhail Delyagin, deputy chairman of the State Duma Committee on Economic Policy, the Kremlin’s response could be to abolish the intellectual property of corporations registered in hostile countries. “They steal from us what we keep from them,” he noted in an interview on May 22. “We are responding by eliminating their intellectual property rights.” The deputy added that it is also possible to freeze the assets of Western corporations in Russia that are associated with them.
Experts interviewed by MK suggested that our country’s mirror response may be unexpected for the West. “Russia had the opportunity to think through an original response to such actions by the EU,” recalled Artem Tuzov, director of the corporate finance department of IVA Partners. “Russia is distinguished by its non-standard approaches to responses to aggression.”
No one among financiers doubts that the West’s actions are a robbery. “This is the beginning of direct theft,” says Alexander Razuvaev, a member of the supervisory board of the Guild of Financial Analysts and Risk Managers. — Moreover, the West will still see how Russia will react. I hope that the reaction of our authorities will be as tough as possible. The country's leadership has warned about this many times, so now it's worth keeping your word. We can easily withdraw some of the investments from unfriendly countries frozen on the Moscow Exchange: OFZs, shares, dividends on shares. It is believed that 60% of the free float on the Moscow Exchange was held by investors from unfriendly countries. Moreover, in the history of the site there have been even more: in 1996 their share reached 90%. Accordingly, now we will be able to respond to the actions of the European Union without problems. If we count everything together: 60% of the shares of investors from unfriendly countries, their bonds, plus direct investments that non-residents of the US and EU made, then we can approximately talk about the possibility of withdrawing up to $300 billion in response to unfriendly actions, which will be almost equivalent to what was inflicted on us damage.» Moreover, the expert is confident that sooner or later Russia, of course, will return its frozen reserves through the courts or after the end of the conflict in Ukraine. The European Union remains a neighbor of our country, we will continue to live side by side, so it would be better for both sides to improve relations.
However, the situation is very unusual. The West is losing much more than it is gaining. This is a severe blow to the authority of the dollar and the euro, to their status as world currencies. “But the Europeans are cunning: they take income from assets, not the money itself,” Razuvaev emphasized. — Obviously, they want to look at the reaction of the Russian authorities and plan their further actions. But, of course, this is a very unfriendly step.”
The most obvious “symmetrical move” is the confiscation of dividends and coupons accumulated in type “C” accounts of non-residents from EU countries. But there is a more radical solution — the nationalization of banks and enterprises owned by non-residents from EU countries. “For example, the assets of the Russian subsidiary of the Austrian group Raiffeisen Bank International amounted to 21.1 billion euros at the end of the first quarter of 2024 — only 10.4% of the assets of the entire group, while after-tax profit for this period reached 326 million euros — 45 .2% of the after-tax profit of the entire group,” recalled Maxim Osadchiy, head of the analytical department of BKF Bank. — It is clear that the loss of Russian business in one form or another will be extremely unpleasant for the Austrian group. The assets of the Russian subsidiary of the Italian group UniCredit at the end of 2023 amounted to 14.3 billion euros, while pre-tax profit for this period amounted to 886 million euros.” All this can be a good help for the Russian budget, but it will be an extreme form of reaction to the unfriendly actions of the Europeans.