President Joe Biden’s administration recently supported a bill to transfer frozen Russian assets to Ukraine. We are talking about an amount of over 300 billion dollars. What can interfere with the fund transfer process, what and when will the final decision be made on the frozen assets of Russia and its oligarchs?
US President Joe Biden’s administration has backed a bill that would seize nearly $300 billion in frozen Russian assets and use the funds to rebuild Ukraine. The US executive branch must now be given the authority to seize funds. Sovereign Russian assets are expected to partially compensate for the damages inflicted by the Russian Federation on Ukraine. According to last year’s World Bank estimates, this figure reaches at least 411 billion dollars. The authors of the “Restoring Economic Prosperity and Opportunities for Ukrainians Act” are congressman Republican Jim Risch and Democrat Sheldon Whitehouse. Support for the document emerged in an environment where Republicans in Congress blocked the allocation of more than $60 billion in aid to Ukraine. Focus He investigated whether it was realistic for Ukraine to receive funds from frozen Russian assets as early as 2024.
Transfer of Russian assets: G7 leaders’ meeting approaching
But before it is adopted, President Joe Biden’s administration wants to coordinate the seizure of Russian assets with G7 allies, particularly in Europe. This is where nearly $200 billion of the Kremlin’s frozen assets are stored.
As Assistant Secretary of State for European and Eurasian Affairs James O’Brien said in a comment to Bloomberg, the United States is working on legislation that would allow the country to seize and use Russian assets within U.S. jurisdiction. He noted that the decision on whether this will be done and how they will be used has not yet been made and will currently be developed jointly with partners from the G7.
“G7 leaders stated that Russia’s assets frozen abroad would not be returned unless Russia made payments… They then instructed the G7 to begin working on practical issues of how these frozen assets could be used for advance payments from Russia to Ukraine. We will work on this with our partners and of course with Ukraine,” O’Brien said.
The issue of transferring assets to Ukraine will be on the agenda at the meeting of G7 leaders to be held in February to mark the anniversary of Russia’s invasion of Ukraine.
“Together with our G7 partners, we are exploring all options consistent with our relevant legal systems and international law to help Ukraine obtain compensation from Russia,” the US State Department said in a statement, as quoted by Bloomberg.
From bill to confiscation: How many steps are ahead of us?
Democrats and Republicans on the committee disagreed on two key parts of the document. The proposed legislation would require Biden to coordinate with the G7 to seize assets but would not require their approval, which could allow the United States to take unilateral action.
Also includes Language aimed at preventing Russia from challenging the forfeiture order in U.S. courts, which could be potentially vulnerable to constitutional challenges.
The White House was initially hesitant to mandate coordination with the G7, but has since emphasized the need to act together with allies. Therefore, approval is ahead.
But the issue of accepting the confiscation is more political, says financial analyst Andrei Shevchishin.
“The main risk here is that US actions could significantly undermine the credibility of the dollar as a global currency. Simply put, if I am unsure of the safety of my funds (especially if I am a bad guy), then I will not move the funds in dollars or my assets could be blocked.” keep in countries. Therefore, a geopolitical question arises: is the United States ready to take such a step for the sake of Ukraine, or is it ready to take it for the sake of preserving a certain police status that keeps an eye on all the bad guys? . At the same time, it will be necessary to resist a strong investor outflow from American securities and banks. Can they withstand such pressure at current debt levels? Won’t this lead to a significant economic decline?” states Shevchishin in an interview. Focus.
In his opinion, distributing the surplus from frozen funds and revenues rather than confiscating the main amount is a simpler way to transfer Russian funds to Ukraine.
“It is another matter that such a decision is unanimously supported by all countries other than the UN or the Russian Federation. Or it will be the decision of an international court recognized by most countries. So this is another issue.” Global recognition of such a right as one of the penalties imposed by the Russian Federation for aggression. But we understand that this seems only a hypothetical solution for now,” adds Shevchishin.
Vitaly Shapran, economist, member of the Association of Financial Analysts and former member of the NBU Council, believes that there is no deadline established by law and everything will depend on political disagreements. However, there is still hope that a decision will be reached in 2024.
In the United States, two bills need to be decided this year: one on the sovereign assets of the Russian Federation, the other on the frozen funds of Russian oligarchs.
“Since both bills are bipartisan, I do not think the deadline will go beyond 2024. The pace of adoption of HR4175 on the seizure of sovereign assets of the Russian Federation will be faster,” says the expert.
There has already been a process of individual oligarchs beginning to seize private Russian assets. In particular, Vitaly Shapran reminded that the bill on the seizure of assets of Russian oligarchs was introduced only on November 29, 2023, on the Seizure of Assets for Ukraine Reorganization Act. At the same time, the seizure of assets, especially those of Russian oligarch Konstantin Malofeev, also initiated this process.
“The adoption of the two bills will only strengthen the legal regime of the period and reduce the risk of legal battles for the Russian Federation . Therefore, I think that in the near future the trend of confiscations will continue, but this time towards the sovereign assets of the Russian Federation,” explains Vitaly Shapran.
And what will be the procedure for transferring assets, “living” funds or part of US assets to finance military and humanitarian aid to Ukraine, this is already a technical question. According to Shapran, Russian oligarchs’ assets and US sovereign assets are more than enough to finance both directions.
Meanwhile, the authors of bills on the seizure of assets of the Russian Federation have provided safeguards for future international courts to which Russia will appeal. So both documents will strengthen the USA’s position in the courts. Shapran adds, “Moreover, the fact that Iran, which has been fighting a legal battle over its frozen reserves since the 1980s of the 20th century, actually lost these reserves set an important precedent for the USA and the EU.”
Long-term legal game: What is the EU’s stance on frozen Russian assets
In the European Union, as a result of sanctions imposed on the Russian Federation for the full-scale invasion of Ukraine, the lion’s share of the foreign assets of both the Central Bank of the Russian Federation and the Putin regime oligarchs have already been seized. blocked. However, discussions about the future fate of frozen Russian capital still continue.
G7 leaders are considering pooling blocked assets linked to Russia at the EU or international level to generate profits that could be used to finance Ukraine’s recovery.
This is not about transferring the attacker’s seized funds to Ukraine, but only about the diversion of interest income from such assets.
In addition, many European Union countries did not in any way support Spain’s proposal to use profits from frozen Russian assets to help Ukraine. Interviewed Focus experts tend to believe that the European Union will delay the resolution of the issue of the transfer of Russian assets to Ukraine.
“There is a debate around this issue in the EU, where the Russian Federation has more sovereign assets. There is already a political solution, but consultations are still ongoing with the European Central Bank (the central bank of the EU), whose position is slowing down.” process down. Hungary’s influence was minimal and manageable“, recorded Focus Vitaly Chapran.
The main concern of the European Central Bank regarding frozen Russian assets is the so-called “weakening of confidence in the euro”. The ECB believes this could be a bad signal for global markets. Moreover, such a decision would encourage central banks of countries with large cash reserves to turn their backs on the euro, especially if the EU acts unilaterally without the participation of other G7 countries.“There’s no disagreement that it’s morally right, but it’s very difficult to figure out how to do it. You can’t just skirt the law.” “And even if there were some legal justification, it is not clear what the consequences would be for the euro’s status as a world currency,” he said.
Source: Focus
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