Russian President Vladimir V. Putin has signed a decree that could pave the way for the rapid seizure and sale of Western assets within Russia. This move serves as a clear warning to European leaders, who are currently meeting to discuss a proposal to provide a $165 billion loan to Ukraine, utilizing Russian state assets previously frozen in Europe.
Putin’s decree, signed on Tuesday, underscores Moscow’s firm intention to retaliate should European nations proceed with the loan to Ukraine. Analysts suggest that Russia might respond by confiscating assets belonging to foreign companies and individuals from countries supporting the loan. Russia has already taken control of several Western companies operating in the country since the conflict began.
Anton G. Siluanov, Russia’s finance minister, asserted that his country has frozen an equivalent amount of Western assets to what the West has immobilized from Russia, indicating that Moscow’s response would be symmetrical. Since the war’s outset, Russia has been diverting profits from Western assets into special state-controlled bank accounts.
European officials are increasingly turning their attention to Russia’s frozen funds as American aid to Ukraine diminishes, particularly under President Trump’s administration. The European Union’s executive body is pushing forward a proposal for an interest-free ‘reparations loan’ of 140 billion euros (approximately $165 billion) to Ukraine. This loan is designed to leverage Russian assets without directly seizing them, with repayment contingent on Russia compensating Ukraine for war damages. Britain is reportedly exploring a similar initiative.
“We need a more structural solution for military support,” stated Ursula von der Leyen, President of the European Commission, on Tuesday. “This is why I have put forward the idea of a reparations loan that is based on the immobilized Russian assets.”
She clarified that the loan would be distributed in installments and would avoid outright confiscation of Russian assets. The Group of 7 nations has already extended a loan to Ukraine, using the interest generated from the Russian assets as collateral.
This strategy to further utilize the frozen assets has gained momentum following initial proposals by Ms. von der Leyen and a similar suggestion last week by German Chancellor Friedrich Merz. Merz faces growing opposition from the far-right at home, who criticize him for allocating German taxpayer money to Ukraine. However, the Prime Minister of Belgium, where the majority of Russian assets are held, has expressed opposition to the idea, citing significant risks for his country.
“It’s a very interesting geopolitical turn,” commented Maria Shagina, a research fellow at the International Institute for Strategic Studies. She added that given Mr. Trump’s isolationist foreign policy, “Europe needs to play ball and adopt another strategy.”
What Has Russia Stated?
This evolving situation in Europe is a disconcerting development for Russia, as President Putin has, for many years, heavily prioritized his nation’s financial stability.
The approximately $300 billion in Russian sovereign assets frozen by Western nations, primarily located in the European Union and Britain, represent nearly half of the Russian Central Bank’s gold and foreign-exchange reserves, according to Russia’s Finance Ministry in 2022. These assets were frozen by Western countries shortly after Russia’s full-scale invasion of Ukraine.
In September, Maria Zakharova, spokeswoman for the Russian Foreign Ministry, warned that Moscow would react strongly if Europe proceeded to use these funds.
“We have repeatedly stated that we will respond harshly to any unfriendly actions related to any attempts to deprive Russia of ownership of its sovereign assets,” Ms. Zakharova declared on September 12. “We reaffirm this position.”
Russia may perceive Europe’s proposed financial engineering, even if it falls short of direct seizure, as a distinction without a meaningful difference.
In Tuesday’s decree, Mr. Putin outlined an expedited process for determining the market value of state-held assets in Russia within 10 days, allowing for their sale to new owners via PSB, a state-controlled bank that finances Russia’s military-industrial complex. This mechanism could facilitate swift sales of assets confiscated by the Russian state.
Dmitri A. Medvedev, deputy chairman of the Russian national security council, declared on September 15 that Russia would relentlessly pursue E.U. states and “European degenerates from Brussels” attempting to confiscate Russia’s property, vowing to do so “until the end of time” and “by every means possible.”
He further stated that Russia would pursue Europeans “in all possible international and national courts” and, “in some cases, even out of court.”
How Far Could Russia Go?
Experts suggest that the Kremlin could target European assets within Russia in response. This might include Type-C accounts, where Moscow has sequestered the Russian earnings of foreign entities and individuals since the West froze its sovereign assets. Foreigners can access funds from Type-C accounts only with specific Russian government approval.
Moscow could also confiscate and sell off the assets and shares of foreign companies operating in Russia. Since the war’s commencement, Russia has taken over the operations of several European companies in the country, notably including the Danish beer giant Carlsberg.
Alexander Kolyandr, a nonresident senior fellow at the Center for European Policy Analysis, suggested that Russia might mirror Europe’s strategy by issuing a loan against the assets in Type-C accounts to bolster its constrained state budget. He estimated the total amount in Type-C accounts to be in the low tens of billions of dollars, though the exact figure remains unknown.
Another potential measure, according to Mr. Kolyandr, would be an expedited, outright confiscation of property or shares owned by individuals and companies from the European nations supporting the loan to Ukraine. The Bell, an independent Russian online publication, has estimated that hundreds of millions of dollars in Western assets could be at risk.
Mr. Putin warned in September that any European action to seize Russia’s sovereign assets “would completely destroy all principles of international economic and financial activity, and would undoubtedly cause enormous harm to the entire global economy.”
During an appearance in Minsk, the Belarusian capital, in June, Mr. Putin asserted that the West’s “theft” of Russia’s reserves would only accelerate the fragmentation of global financial systems. Russia has actively urged other nations to shift their trade away from dollars and euros and to develop alternative payment systems impervious to Western interference.
“There’s constant talk about how they’re planning to steal our money,” Mr. Putin remarked. “But once that happens, the movement toward regionalization of payment systems will accelerate and become, without a doubt, irreversible.”
He concluded, “Perhaps it’s worth paying for.”