The EU, the US, and their allies have frozen hundreds of billions of dollars’ worth of Russian central bank holdings as part of sanctions related to the Ukraine conflict.
“I know that our gold and foreign exchange reserves are frozen. Yes, we have already earned twice as much. But we’re not even talking about this $300 billion, we’re talking about undermining trust in those who did this,” the Russian president argued.
Many economists, including in the West, have warned that the seizure of Russian assets would jeopardize investor confidence in the EU’s banking system and damage the bloc’s status as a global financial center.
Nearly $300 billion of Russian gold and forex reserves have been frozen since the beginning of Moscow’s military operation in Ukraine. The Russian central bank’s reserves decreased by 8.4% in 2022, according to official estimates.
In March of this year, the Bank of Russia resumed publishing data on the structure of state reserves. As of August, the country’s gold and foreign exchange funds amounted to $580.5 billion.
Elsewhere in his remarks, Putin said western countries are destroying the existing framework of global economic relations that they helped to build in the first place, adding that many countries are opposed to this.
The president stated that the landscape of the international economy is changing in part because “some countries, primarily Western nations, are destroying the system of financial, trade, and economic relations with their own hands.”
However, this destructive activity coincided with the expansion of “real business cooperation,” involving many nations around the world that resist any external pressure and pursue their own national interests, Putin said.
“They prioritize not temporary political events, but the promotion of their own projects… that bring direct and long-term benefits to their populations,” Putin continued, adding that this leads to the emergence of a new international model “shaped not by Western standards [and] catering to the selected ‘golden billion,’ but all of humanity… and the developing multipolar world.”
Putin’s comments come after Russian Foreign Minister Sergey Lavrov said earlier this month that the BRICS economic group – which recently announced an unprecedented expansion – and the Shanghai Cooperation Organization (SCO) are gaining more international clout as many nations seek to bypass Western-dominated international institutions that fail to address their grievances.
In June, he also estimated that one in four countries in the world is to some extent sanctioned by the US or European nations. According to Lavrov, this means that the West is using the global economy “as an instrument of coercion, blackmail, and punishment.”
Western countries imposed particularly harsh sanctions on Russia over the Ukraine conflict, including the freezing of Russian gold and foreign exchange reserves to the tune of around $600 billion, a move that Moscow condemned as “theft.”
Putin also stressed that Western sanctions on Russia have jeopardized trust in the dollar and the euro, forcing many global players to reevaluate the viability of relying on these currencies.
Witnessing the way both the US and EU use their currencies as political weapons pushed many countries towards creating alternative payment instruments, Putin stated.
“Restrictions on, let’s say, settlements in dollars. Where do they lead? To the fact that all countries start thinking about creating their own instruments, about creating new settlement systems; thinking whether to continue keeping their reserves in the US or EU, whether to invest in the securities of these countries,” Putin said, adding sanctions cause an “erosion of credibility” in countries that impose them, as well as their currencies.
Both the US and EU imposed a range of financial restrictions on Russia in response to Moscow’s military operation in Ukraine. These included disconnecting Russian banks from the SWIFT interbank messaging system, a ban on servicing Russia’s debt in dollars, the freezing of Russian assets held abroad, and the exit of Visa and Mastercard from the country. Sanctions effectively deprived Russia of the ability to conduct international transactions in dollars and euros.
This led to the increased use of national currencies in Russia’s foreign trade. Ruble trade settlements between Russia and Turkey jumped by 230% in the first seven months of the year compared to the same period in 2022, while the share of national currencies in Russian-Chinese payments recently exceeded 80%.
Putin also stressed that Russia has never and nowhere acted as a colonizer, unlike the Western countries.
“In my opinion, the main thing is that we have never been colonizers anywhere. Our cooperation has always been built on an equitable basis or on the wish to help and support. Those countries which are trying to compete with us now, they had a completely different policy. When people compare what happened in the past in cooperation with Russia, with the Soviet Union, as it was called then, and with other countries, of course, everything is in Russia’s favor. Of course, today we should take this into account and keep it in mind,” he concluded.