Russia Threatens to Seize Foreign Assets Amid Frozen Reserves Dispute

Russia threatens to seize foreign assets in retaliation for Western confiscation of its frozen reserves, but its ability to do so is limited by declining foreign investment. The escalating dispute highlights the complex economic and legal challenges arising from sanctions.

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Shivani Chauhan
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Russia Threatens to Seize Foreign Assets Amid Frozen Reserves Dispute

Russia Threatens to Seize Foreign Assets Amid Frozen Reserves Dispute

Russia has threatened to seize foreign investors' assets in response to potential Western confiscation of its $300 billion frozen reserves, despite limited options due to declining foreign investment since the Ukraine invasion. The United States and European Union are considering ways to access these frozen assets, which Russia says would be an act of "banditry."

One likely countermeasure is for Russia to confiscate foreign investors' financial assets and securities currently held in special "type C" accounts in Russia. The government may also target non-exchange assets like taxes, grants, and private donations held by "unfriendly" countries. While Russia has already forced foreign companies to sell assets at discounts, the value of seized assets goes beyond physical assets and includes technology, know-how, and connections.

Why this matters: The escalating dispute over frozen Russian assets and potential retaliatory seizures could further strain relations between Russia and Western nations. It also highlights the complex economic and legal challenges arising from sanctions and asset freezes related to the ongoing conflict in Ukraine.

However, Russia's ability to retaliate symmetrically has been eroded by dwindling foreign investment. The threat of asset seizure is limited by the fact that a significant portion of foreign investment in Russia is likely Russian money registered abroad. Experts say Russia's threat to seize foreign assets is less salient given the smaller amount of assets it can target.

JPMorgan Chase has stated that its assets in Russia may be seized after lawsuits in Russian and U.S. courts, as the bank faces several legal challenges over its Russian dealings after sanctions were imposed. A Russian court has already ordered the seizure of funds in JPMorgan accounts after Russian state-owned bank VTB sued to regain its funds blocked abroad.

Russian Foreign Ministry spokeswoman Maria Zakharova stated that Russia would never cede territories seized from Ukraine in exchange for the return of frozen assets, saying "Our motherland is not for sale." Kremlin spokesman Dmitry Peskov said there is still a lot of Western money in Russia that could be targeted by Moscow's counter-measures, and that the "prospects for legal challenges against the confiscation of Russian assets will be wide open," with Russia "endlessly defending its interests."

Key Takeaways

  • Russia threatens to seize foreign investors' assets in retaliation for Western asset freezes.
  • The U.S. and EU consider accessing Russia's $300B frozen reserves, which Russia calls "banditry".
  • Russia's ability to retaliate is limited by declining foreign investment since the Ukraine invasion.
  • JPMorgan Chase faces legal challenges over its Russian dealings and may have assets seized.
  • Russia vows to never cede seized Ukrainian territories in exchange for frozen assets.