Kremlin warns West against using frozen Russian assets as collateral for Ukraine

MOSCOW: The Kremlin on Monday warned the West that any attempt to use frozen Russian assets as collateral to raise funds for Ukraine would be illegal and lead to years of litigation because Moscow would challenge any such action.

The Financial Times reported on Saturday that the G7 had drawn up plans to use frozen Russian assets as collateral for debt sold to help Ukraine. Bloomberg also reported on the plan.

“We do not yet know how much these publications correspond to reality. Are there really such plans? It is important to wait for official statements on this matter,” Kremlin spokesman Dmitry Peskov said.

“We know that even the most serious publications now, unfortunately, consciously or not, make a lot of mistakes.” After President Vladimir Putin sent troops into Ukraine in 2022, the United States and its allies prohibited transactions with Russia’s central bank and finance ministry, blocking around $300 billion of sovereign Russian assets in the West.

The Russian central bank has not given a detailed breakdown of what was frozen but a rough outline can be gained from documents detailing Russian holdings at the beginning of 2022.

At that time, Russia’s central bank held around $207 billion in euro assets, $67 billion in US dollar assets and $37 billion in British pound assets.

It also had holdings comprising $36 billion of Japanese yen, $19 billion in Canadian dollars, $6 billion in Australian dollars and $1.8 billion in Singapore dollars. Its Swiss franc holdings were about $1 billion.

Russia has said that if its property is seized then it will seize US, European and other assets in responses.

Some senior Western officials are concerned that confiscating Russian assets invested in government bonds denominated in euros, US dollars and British pounds could undermine the willingness of central banks to store reserves with each other.

Peskov said that any attempt to take Russian assets would lead to years of legal challenges from Russia.

“Of course, the Russian Federation will challenge such decisions, we will protect our interests and our assets illegally seized,” Peskov said. “Encroachment on someone else’s property undermines all the foundations of the economic system, including the economic system of those who will implement these decisions.” “We are convinced that decision makers also understand the inevitability of these consequences. We are watching very closely.