On January 23 at 11:00 am Moscow Time, the Valdai Club hosted an expert discussion, titled “From Freezing to Confiscation: Risks for Russian Assets in the West”.
After the start of Russia’s special military operation in Ukraine, Western countries froze the assets of Russian public and private entities that had been subject to blocking financial sanctions. At the same time, the possibility of confiscating these assets with the subsequent transfer of the funds received to Ukraine was discussed. So far, only Canada has such a legal mechanism. It will also be the first country to implement the idea of confiscation in practice. The Canadian experience could be adopted by other Western countries. In the United States, work on such a mechanism was announced back in April 2022. In the EU, a similar mechanism is also being developed, but its final form hasn’t been introduced in the form of new legislation.
Such initiatives are a strong signal that the confiscation rule is not dormant. The property of Russians and Russian companies that have not yet come under sanctions can be not only frozen, but also confiscated in Western countries. Investors and owners from countries such as China, Saudi Arabia, Turkey, and others may become potential targets for the expanded sanctions in the future.
Russia may take retaliatory measures. If the practice of confiscation in the West becomes widespread, then the Russian side can massively retaliate by targeting the remaining Western business, despite the fact that until now Moscow has been extremely careful about freezing Western property. The practice of confiscation modifies the very Western idea of sanctions. If earlier it was aimed at “changing the behaviour” of sanctioned persons, resulting in an eventual lifting of sanctions, now sanctions are becoming exclusively a mechanism for causing damage.
Will the confiscation of Russian property in the West become widespread? Will Russia take equivalent retaliatory measures? How will the practice of applying sanctions change in the future? Participants of the expert discussion answered these and other questions.
Speakers:
Jacques Sapir, Professor of Economics at the Paris School of Social Sciences (EHESS) and Moscow State University (France)
Dmitry Timofeev, Director of the Department for Control over External Restrictions of the Ministry of Finance of the Russian Federation
Moderator:
Working languages: Russian, English.