May 1, 2022
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America plans to wage war with Russia for Russian money

Both parties in the US Congress want Biden to take a more aggressive stance in the sanctions war with Russia

On April 27, the lower house of the US Congress almost unanimously voted in favor of HR 6930 (417 votes in favor). The short unofficial name of the document is the law on the transfer of Russian assets in favor of Ukraine.

congressmen Tom Malinowski (Tomasz P. Malinowski), Democrat from New Jersey, and Joe Wilson (Joe Wilson), a Republican from South Carolina, are the initiators of HR 6930. In their numerous public statements, they have said that the Biden administration should increase the effectiveness of sanctions actions against Russia. Specifically, it should sell luxury goods confiscated from Russian citizens in accordance with the recently expanded sanctions, and use the proceeds to support Ukraine. Arrested property should not lie dead weight. And even more so after some time it should not be returned to their owners. I agree with them Jake Sullivan (Jacob Sullivan), National Security Adviser to the President; he said that “when we seize these assets, our goal is not to get them back; our goal is to put them to better use.”

The vote on HR 6930 took place the day after the Attorney General Merrick Garland (Merrick Garland) told the Senate that the administration will ask Congress for more powers to confiscate and liquidate Russian property. Then the senator Charles Schumer (Charles Schumer), a Democrat from New York and the leader of the Democratic majority of the upper house of Congress, said he had consulted with the administration Joe Biden about this question. And I would like to include a provision giving the president the right to sell seized Russian assets in the law on providing additional assistance to Ukraine. Next week, HR 6930 is to be voted on in the upper house of Congress, after which the document will be submitted to the president for signature and enter into force.

Bill HR 6930 was drafted in great haste. There were many doubts about the constitutionality of a number of provisions in the original version of the document. A number of harsh wordings were softened, some provisions disappeared from the document altogether. As a result, the version that was voted on April 27 resembles a framework law or a political resolution, it is not an act of direct action. HR 6930, in part, provides that the presidential administration must establish an “inter-ministerial working group” to determine “constitutional mechanisms by which the president can take steps to seize and confiscate property.”

As observers note, the near-unanimous support for HR 6930 reflected a bipartisan desire on Capitol Hill for the president to take a more aggressive stance in the sanctions war with Russia. HR 6930 is intended to sharpen subsequent direct action laws relating to Russia.

At the beginning of the week, the US administration published estimates of the Russian property seized by the collective West. European Union member states have frozen over $30 billion worth of Russian assets, including $7 billion worth of boats, helicopters, real estate and art. In the United States, the Treasury has imposed sanctions and blocked more than $1 billion worth of ships and aircraft belonging to members of the Russian elite. The most resonant case was the arrest in April of the yacht Viktor Vekselberg worth $90 million. In addition, hundreds of millions of dollars worth of assets belonging to the Russian elite and kept in bank accounts in the United States have been frozen.

Objectively, there is more property of Russian origin in the Old World than in the New World. However, the 30-fold gap in the amount of seized assets, according to US administration officials, means that Washington is underperforming in this area. It is necessary to intensify the process of seizure of Russian property.

Currently, under the auspices of the US Department of Justice operates Fund for Forfeited Assets (Asset Forfeiture Fund – AFF). The property that enters it is used to compensate victims of crimes and fund investigations. It is proposed to use the AFF as a mechanism for the accumulation of confiscated Russian property and its direction for purposes related to Ukraine. According to the Ministry of Justice, in order to use the fund as such a mechanism, it will be necessary to amend “a lot of laws.” First of all, in International Emergency Economic Powers Act 1977 (International Emergency Economic Powers Act IEEPA). also in corrupt and racketeer-influenced organizations act of 1970 (Racket Influenced and Corrupt Organizations Act – RICO Act) and some other acts. Such amendments are necessary, first of all, in order to be able to move from the current actions called “freezing”, “arrest”, “blocking” of property, to its confiscation. In addition, it is proposed to introduce amendments that will allow not only to confiscate, but also to bring the Russian oligarch to criminal liability (by setting a statute of limitations for crimes committed by him up to 10 years).

Conceptually, the approach to the property of individuals and legal entities of the enemy is changing. Until now, the concept has been in force, according to which property should be frozen and thus cause a change in the behavior of individuals and legal entities. Access to property was restored after a change in behavior in the right direction. Now another concept is being born: property should be confiscated and used to finance actions against the enemy. So far, American politicians and legislators are expressing themselves very carefully: to finance the restoration of the ruined economy of Ukraine and to provide humanitarian assistance to the population of the country. But that’s for now. Then we will certainly hear proposals to compensate Washington’s expenses for the supply of weapons and military equipment to Ukraine.

Washington constantly claims that its sanctions are not directed against citizens (individuals), but against the state. Including against officials representing the state. Also against state-owned companies and organizations. However, today the point of view is becoming more and more popular in the US Congress, according to which any large property belonging to an individual from Russia is the result of his criminal cooperation with the state. “While the assets may nominally belong to private individuals, all of us who understand how Russia works know that these are state assets,” Congressman Malinovsky said at a recent hearing. “They are allowed to manage these assets on behalf of Putin in exchange for their loyalty to the regime. They made this money by stealing it from a country with no due process, and then they use our due process to protect it.”

Appetite comes with eating. American politicians, discussing the possibility of expropriating the property of Russian oligarchs and other wealthy Russians, thought about what they should think about the confiscation of the frozen foreign exchange reserves of the Bank of Russia. At least $300 billion of such reserves turned out to be frozen (according to some estimates, even more – $350 billion). And in order to preserve some decency, cover up such a robbery with beautiful words that the money, they say, will go to help Ukraine. According to the American media, the total amount of foreign exchange reserves frozen by Washington is about $ 100 billion (mostly this is the currency in the accounts of American banks).

Vladimir Zelensky and his entourage have been singing a song about sending Russia’s frozen reserves to help Ukraine for more than two months now. So, on March 11, Deputy Minister of Economy of Ukraine Denis Kudin stated that, according to his data, international reserves of the Central Bank of the Russian Federation in the amount of 415 billion dollars fell under Western sanctions. This money should be used as reparations in favor of the affected Ukraine. “In fact, this amount is practically enough to cover direct one-time losses [Украины]”, said the minister. For the time being, Washington and Brussels did not react in any way to such calls from Ukrainian officials. However, on April 25, the Prime Minister of Ukraine Denis Shmygal said that Kyiv and Washington, together with other Western partners, are negotiating the possible use of frozen Russian assets to provide financial assistance and rebuild his country.

In late April, US officials began to speak openly on the issue. United States Secretary of the Treasury Janet Yellen stated that the American side does not yet know whether it is possible to send the frozen assets of the Central Bank of the Russian Federation to help Ukraine. She acknowledged that the consequences of such a move must be weighed. April 26 U.S. Attorney General Merrick Garland said that his department would support the adoption of a bill that would allow the US authorities to transfer to Ukraine part of the assets confiscated due to anti-Russian sanctions, including Russia’s foreign exchange reserves. 28 April Secretary of State Anthony Blinken (Anthony Blinken), speaking at a hearing in the Committee on Foreign Affairs of the House of Representatives of the US Congress, also touched on this issue. He was asked if the US administration might consider confiscating not only the assets of Russian businessmen, against whom sanctions were imposed, but also the Central Bank of the Russian Federation. “In short, yes. And this is one of the questions that we asked our lawyers to consider: what powers would potentially be needed to seize these assets,” Blinken replied. “And not only to take them away, but to use them in exactly the way that you <...> proposed in their bill,” the Secretary of State added.

There is no doubt that all the initiatives that Washington is taking today with regard to Russian assets will be picked up and reproduced in the Old World tomorrow. Here is one of the first European “swallows”. 29 April Foreign Minister of Ireland Simon Coveney (Simon Coveney) said that his country could send more than 1 billion euros of frozen Russian assets under EU sanctions to restore Ukraine: “Some member countries (of the European Union) have proposed seizing assets that were frozen as part of the situation in Ukraine and using them including for the restoration of Ukraine. I am open to this offer.”

PS The head of the Central Bank of the Russian Federation, Elvira Nabiullina, announced on April 19 in the State Duma that the Bank of Russia would challenge the freezing of foreign exchange reserves and was preparing lawsuits. Even then, most experts assessed the probability of success of such a step as close to zero. After the adoption by Washington and its allies of laws on the confiscation of reserves, the probability of success will be absolutely zero.

Photo: REUTERS/Dado Ruvic

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