Monday, June 24, 2024

Russia president lays groundwork for confiscation of US assets

The property of US-linked entities will be held liable for any confiscation of Russian assets by the US government, according to a decree signed by Russian President Vladimir Putin on Thursday.

The US and its allies have frozen some $300 billion in Russian sovereign assets due to the Ukraine conflict. Western nations are devising ways to use the funds to help Kiev’s war effort against Moscow.

The document released by the Kremlin outlines a future mechanism that would allow any damages caused by the US to be offset by property owned by the US itself or associated entities. The Russian government and central bank would be empowered to seek redress for such losses through a Russian court.

Those who could face potential action against their assets include US citizens or those who reside in the country, or those do most of their business or generate most of their profits there. The property of people “under control” of such individuals will also be liable, regardless of their nationality and residency.

The court will be able to grant compensation in the form of property physically present in Russia, shares in Russia-registered businesses and property rights. A governmental commission will be responsible for compiling the list of those who could be targeted for compensation.

Putin’s decree gives the government four months to prepare the legal framework for the mechanism and submit the relevant proposals to the parliament for consideration.

The Ukrainian government has been urging its Western backers to confiscate Russia’s sovereign assets and use them to cover Kiev’s military and reconstruction needs. The US supported the proposal, but European nations, in whose jurisdiction most of the funds are held, have objected out of concern that such a move would be illegal and would deliver a serious blow to the Western financial system and the reputation of the euro.

Less ambitious Western plans include imposing a windfall tax on profits generated by the immobilized assets and using them either directly to buy weapons for Kiev or offering them as collateral for a loan, which would then be used to bolster the Ukrainian military.

Moscow has announced it considers any form of expropriation as theft. Russia has vowed to retaliate, if the West infringes on its property rights.

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