Moscow has warned that it will respond with similar measures if Western countries use revenues generated from frozen Russian assets. Finance Minister Anton Siluanov made this statement in an interview with Asharq TV, in response to proposals by several countries to use profits from investing Russian frozen assets to cover the cost of the reconstruction of Ukraine.
Siluanov stated, “We have frozen the funds of unfriendly countries as well…Then, we will do the same in this case.” This warning comes as nearly $300 billion of Russian forex reserves have reportedly been frozen since Moscow’s military operation in Ukraine began. The Russian central bank’s reserves decreased by 8.4% in 2022, according to official estimates.
This move to freeze Russian assets has had a significant impact on the economy. Belgium-based Euroclear, a major EU clearing house, revealed that it earned more than €1.7 billion in profit from frozen Russian assets out of the €2.28 billion ($2.4 billion) it earned in the first half of 2023. Euroclear is estimated to hold €196.6 billion worth of Russian assets, with the majority owned by the Bank of Russia. The EU has reportedly frozen €207 billion in Russian assets and reserves since February 2022.
In response to these developments, EU policymakers are considering the imposition of a windfall tax on profits generated from the immobilized funds, which is estimated to create approximately €3 billion in profits. Belgian Prime Minister Alexander De Croo has already announced that his nation will send tax revenue worth €1.7 billion, generated from seized Russian assets, to Ukraine.
The frozen Russian assets and reserves have become a contentious issue between Russia and Western countries. While the Western countries argue that using the profits to support Ukraine’s reconstruction is justified, Moscow sees it as an unfriendly act and an attempt to exert economic pressure.
It remains to be seen how Moscow will respond and what further measures they will take if Western countries go ahead with using the frozen Russian assets. This ongoing dispute highlights the tensions and complexities involved in international relations and economic sanctions. As the situation unfolds, it will be crucial to closely monitor the actions and reactions of all parties involved.