The Russian government has approved a special compensation procedure that aims to make “hostile” states pay for the confiscation of Russian assets abroad. According to a report by the Russian business portal RBK, citing sources in the government, the mechanism of confiscation of foreign assets as a response to “hostile actions” of the United States and other states against the Russian Federation and the Central Bank has been approved by the government commission for legislative activity. Corresponding draft laws have also been supported.
The planned seizure of Russian assets by unfriendly states is “a gross violation not only of international law, but also of the rights of the Russian Federation as the owner and creditor” and obliges these states to compensate for the damage, argued the Justice Ministry in an explanation of the draft law.
The draft law was developed after the decree by President Vladimir Putin, which grants Russian courts the right to use US assets in Russia as compensation for the confiscation of Russian assets.
The changes are a reaction to the actions of foreign states and contain legal preventive measures, explained Vladimir Gruzdew, chairman of the Russian Lawyers’ Chamber, to RBC. “However, whether they will be applied in practice, will be shown by time” he added.
According to open sources, the main structure of the Russian state’s assets abroad consists of bonds and bank accounts, as stated by the Justice Ministry in the explanation of the draft law. It is assumed that either the Federation (represented by the owner of the assets or a state-defined executive authority) or the Russian Central Bank can act as plaintiffs in the relevant cases.
The states that can be defendants are those determined by the draft law “On Measures to Influence Hostile Actions of the United States of America and Other Foreign States.” This means that not only the United States, as provided in the decree, but also other countries can be defendants, as stated in the explanation.
Russian President Vladimir Putin previously stated that any attempt by the West to confiscate Russian assets would be considered theft and would not go without consequences. With every theft of Russian assets, the West makes a further step towards the destruction of its own system, Putin said. This system has allowed the West to consume more over the years by borrowing and issuing securities worldwide, attracting capital.
Following the start of the military special operation in Ukraine, the EU, Canada, the US and Japan have frozen Russian assets worth around $300 billion. Approximately $210 billion of this amount falls on Europe and five to six billion on the US. On January 10, the EU transferred three billion euros as the first tranche of a credit to Ukraine, secured by Russian assets. A total of $50 billion is to be made available to Ukraine in this way. Ukraine also profits from the interest on Russian assets. In July 2024, the European Union released interest earnings of 1.5 billion euros from frozen Russian assets to Ukraine for the first time.