Russia’s war with Ukraine has caused it to lose as much as $300 billion, due to assets being frozen by western countries’ sanctions.
An independent news outlet in Russia reported this information recently, just at a time when the United States is wrangling over how to give more aid to Ukraine — or whether to give them anymore at all.
Newsweek recently spoke to a market analysis who said that confiscating this many Russian assets ultimately could result in western economies that will “suffer more losses than gains.”
After Russia invaded Ukraine in February of 2022, many western countries placed sanctions on Moscow that were meant to isolate the country from the global financial system as well as stunt their ability to continue waging a war.
Some of these sanctions included the U.S. and allies prohibiting all financial transactions with the central bank in Russia and its finance ministry. This has amounted to about $300 billion worth of assets for the west in gold, government bonds and major currencies.
A recent report from Bloomberg pointed out that the Biden administration shifted in positions, with President Joe Biden being OK with legislation that Congress is considering that would give the president the power — but not oblige him — to confiscate assets from Russia that were frozen on U.S. territory.
That being said, it’s likely the Bank of Russia would fight such a move, and is already preparing a legal defense in relation to it.
The Bell, an independent news outlet in Russia, reported this weekend that, “from Russia’s point of view, the frozen assets are lost.” Yet, Russia is “still threatening retaliatory measures if confiscation goes ahead.”
Last week, the Russian Foreign MInistry said that the plan being put forth by the U.S. amounted to “21st century piracy,” threatening to retaliate if it went through.
Some of these retaliatory moves could include Russia working to nationalize all foreign-owned property and accounts, as well as severing some diplomatic relationship. This, in turn, could create some challenges for the ruble as well as markets in Russia, The Bell reported.
“It seems unlikely that the fate of these assets will be decided in the next six months.”
According to Invest.Conotoxia.com’s market analyst, Grzegorz Drozdz, there currently exists no provision for western states to seize assets that belong to a foreign state that they aren’t at war with clearly.
As he told Newsweek:
“Otherwise, the confiscation of Russian assets,” including those of sanctioned oligarchs, “would have been carried out long ago to support Ukraine in the ongoing conflict.
“The problem with the confiscation of Russia’s frozen assets is a scenario in which it is highly likely that the Western economies will suffer more losses than gains. It is worth emphasizing that their strength is largely based on the rule of law and the protection of investors’ capital.”
This isn’t the only time that a media outlet has reported that Russia has actually suffered immensely from its war with Ukraine, which they thought was going to be a quick walk-in-the-park when they first invaded their neighbor.