President Vladimir Putin has signed a decree that could lead to the seizure of U.S. assets in Russia. This comes as a countermeasure to any potential confiscation of Russian assets frozen in the U.S.
What Happened: The decree comes amid ongoing discussions by G7 negotiators on how to leverage approximately $300 billion of Russian financial assets, including major currencies and government bonds, frozen after Russia’s invasion of Ukraine in February 2022, Reuters reported on Thursday.
According to officials, despite dwindling foreign investment limiting Russia’s ability for a like-for-like retaliation, the country may target private investors’ cash.
The decree allows a Russian entity to seek compensation through a Russian court if its property is unjustifiably seized. The court could then order compensation in the form of U.S. assets or property in Russia.
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U.S.-owned assets potentially liable for seizure include securities, stakes in Russian companies, real estate, movable property, and property rights.
Former president Dmitry Medvedev acknowledged that Russia’s response would likely focus on private individuals’ assets, as the country holds a minimal amount of American state property.
Assets of foreign investors, including individuals and major U.S. investment funds, are held in special “type-C” accounts introduced by Russia after its invasion of Ukraine. Funds in these accounts cannot be transferred out of Russia without permission from Russian authorities.
The U.S. has passed legislation allowing President Joe Biden‘s administration to confiscate Russian assets held in American banks and transfer them to Ukraine, a move Russia has repeatedly deemed illegal.
Why It Matters: The threat of asset seizure has been looming since April 2024, when Russia warned of retaliation over the potential seizure of its frozen assets to aid Ukraine. Valentina Matviyenko, the speaker of the Russian upper house of parliament said Russia is ready to react strongly if its frozen assets are seized.
The Hermitage Capital CEO had urged the use of $300 billion frozen Russian assets to stop the Ukraine war in early May. "At the end of the day, this is a war of resources. If Ukraine runs out of resources, Russia wins. One way to stop Ukraine from running out of resources is to give them the $300 billion that was frozen of Russian central bank assets," he said.
Earlier this week, EU member states approved a plan to divert earnings from those assets, which have amassed about €3.9 billion ($4.23 billion) in the past year, to Ukraine‘s war effort against Moscow’s invasion. The funds are being managed by a Belgium-based financial service and clearing company, Euroclear. Under the EU plan, $3.3 billion would reach Ukraine this year.
Photo by Salma Bashir Motiwala on Shutterstock
This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
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