Russian President Vladimir Putin has signed a new decree that could fast-track the seizure and sale of Western assets within Russia. This move serves as a stern warning to European leaders, who are gathering to discuss a proposal to provide Ukraine with a substantial $165 billion loan, backed by Russia’s state assets currently frozen in Europe.
Putin’s decree, signed on Tuesday, is the latest indication that Moscow is prepared to strike back if Europe proceeds with the loan to Ukraine. Experts suggest Russia could retaliate by confiscating the assets of foreign companies and individuals from countries supporting the initiative. Russia has already taken control of several Western companies’ operations since the conflict began.
According to Anton Siluanov, Russia’s finance minister, his nation has frozen an equivalent amount of Western assets to what the West has frozen from Russia. He stated that Moscow would respond symmetrically, and has already been channeling profits from Western assets in Russia into special, state-controlled accounts since the war’s outset.
As American financial support for Ukraine dwindles, European officials are increasingly looking towards Russia’s frozen funds. The European Union’s executive body is pushing forward a plan for a 140 billion euro (approximately $165 billion) interest-free “reparations loan” to Ukraine. This financial arrangement aims to utilize Russian assets as collateral without outright confiscation. The loan would only be repaid if Russia eventually compensates Ukraine for war damages. The United Kingdom is also exploring a similar approach.
“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 proposed the concept of a reparations loan, which would be based on these immobilized Russian assets.”
Von der Leyen clarified that the loan would be distributed in installments and would avoid direct seizure of Russian assets. The Group of 7 nations has previously extended a loan to Ukraine, utilizing the interest generated from Russian assets as collateral.
This strategy to leverage Russian assets has gained considerable momentum, building on von der Leyen’s initial suggestion and a similar proposal from German Chancellor Friedrich Merz. Merz is under pressure from a growing far-right opposition at home, criticizing him for allocating German taxpayer funds to Ukraine. However, the Prime Minister of Belgium, where the majority of Russian assets are located, has voiced strong opposition, citing significant financial risks for his nation.
Maria Shagina, a research fellow at the International Institute for Strategic Studies, called this a “very interesting geopolitical turn.” She emphasized that with the current isolationist foreign policy trends, particularly those associated with former President Trump, Europe must adapt and implement new strategies.
Russia’s Official Stance
This shift in European strategy is clearly unwelcome in Moscow, especially given President Putin’s long-standing focus on establishing Russia’s financial stability.
Approximately $300 billion in Russian sovereign assets, primarily held in the European Union and Britain, remain frozen. This sum represents nearly half of the Russian Central Bank’s gold and foreign-exchange reserves, as reported by Russia’s Finance Ministry in 2022. These assets were frozen by Western nations soon after Russia’s large-scale invasion of Ukraine.
In September, Maria Zakharova, the spokeswoman for the Russian Foreign Ministry, explicitly stated that Moscow would retaliate if Europe proceeded with using 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,” Zakharova declared on September 12, adding, “We reaffirm this position.”
It appears Russia views Europe’s proposed financial engineering for the loan, even if it avoids direct seizure of assets, as a distinction without a meaningful difference.
Putin’s decree on Tuesday detailed a fast-tracked process to assess the market value of Western assets held in Russia within a mere 10 days. These assets would then be sold to new owners through PSB, a state-controlled bank deeply involved in financing Russia’s military-industrial complex. This mechanism could enable rapid sales of any assets confiscated by the Russian state.
Dmitri Medvedev, deputy chairman of the Russian national security council, made a strong statement on September 15, vowing that Russia would pursue any EU states and “European degenerates from Brussels” attempting to confiscate Russia’s property “until the end of time” and “by every means possible.”
He further warned that Russia would challenge Europeans “in all possible international and national courts” and, chillingly, “in some cases, even out of court.”
Potential Russian Responses
Analysts believe the Kremlin’s retaliation could target European assets within Russia. This might involve Type-C accounts, where Moscow has been holding the earnings of foreign entities and individuals since the West froze its sovereign assets. Funds in these accounts can only be withdrawn with explicit Russian government authorization.
Another potential move is the outright seizure and sale of assets and shares belonging to foreign companies in Russia. Already during the war, Moscow has taken control of several European company operations, such as those of Danish beer giant Carlsberg.
Alexander Kolyandr, a senior fellow at the Center for European Policy Analysis, suggested Russia could mimic Europe’s strategy by issuing a loan against the Type-C accounts to bolster its constrained state budget. While the exact amount in these accounts is unknown, Kolyandr estimated it to be in the low tens of billions of dollars.
Kolyandr also mentioned the possibility of an accelerated, direct seizure of property or shares owned by individuals and companies from European nations supporting the Ukraine loan. The independent Russian online publication, The Bell, estimated that hundreds of millions of dollars in Western assets could ultimately be at risk.
In September, Putin issued a grave warning, stating that any European action to take 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 a June appearance in Minsk, Belarus, Putin asserted that the West’s “theft” of Russia’s reserves would only hasten the fragmentation of global financial systems. Russia has actively urged other nations to shift their trade away from the dollar and euro, advocating for the development of payment systems free from Western influence.
“There’s constant talk about how they’re planning to steal our money,” Putin remarked. “But once that happens, the movement toward regionalization of payment systems will accelerate and become, without a doubt, irreversible.”
He concluded with a defiant, “Perhaps it’s worth paying for.”
Reporting contributed by Jeanna Smialek from Brussels.