May 13, 2022
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In response to the “Ukrainization” of its reserves, Moscow will hit the pipe

In response to the

Photo: Press service of the Ministry of Defense of the Russian Federation / TASS

The recent initiative of the head of EU diplomacy Josep Borrell about the possibility of withdrawing Russia’s frozen gold and foreign exchange reserves to pay for the costs of restoring Ukraine will certainly make Westerners cringe. Moreover, in the literal sense, and very soon – according to the Brief telegram channel (seen in the publications of the Kremlin insiders), such a step could cause an instant and complete shutdown of gas supplies to European consumers.

It is worth recalling that the proposal made by Borrell to the British edition of the Financial Times has been actively discussed in the EU expert community since the freezing of Russian assets, but has not yet been broadcast at such a high level.

The European official compared the situation with the United States freezing the funds of the Central Bank of Afghanistan (shortly after the return to power in this country of the Taliban banned in Russia *) in February this year. As announced, the $7 billion money will be transferred to a special trust fund at the Federal Reserve Bank of New York. Half of them will go to “meeting the humanitarian needs of the Afghan people,” and the other half – to compensate the victims of the terrorist attacks and their families, including the victims of the attacks on the towers of the World Trade Center in New York on September 11, 2001.

And so the chief of the diplomats of the Old World found this example attractive and said: “We have money in our pockets, and someone should explain to me why this is good for Afghan money and bad for Russian money.” However, if the current Afghan leadership so far has only verbal threats and demands to return the stolen goods, then Russia, as Brief writes, will not only turn off European consumers, but also smash the Ukrainian GTS with missiles. This will make it impossible for the Ukrainian side to receive transit payments (by the way, they still regularly go to the “independent” treasury). And in addition, Moscow will stop the flow of oil and gas through Belarus. All this, as the authors of the report believe, will lead to the fact that after the end of the special military operation, Europe will have to urgently launch Nord Stream 2 and conclude new contracts with Russia, but at prices close to spot markets.

The Brief message has already been commented on in his telegram channel by a former deputy of the Verkhovna Rada of Ukraine, chairman of the parliament of Novorossia Oleg Tsarev. In his opinion, “(This information) is more like a special stuffing in order to prevent the transfer of gold reserves (gold of foreign exchange reserves) to Ukraine.”

“Otherwise, it would have been voiced by someone in power, and not by an anonymous telegram channel. I have doubts that such radical measures will be taken by Russia. The denial of energy supplies will hit everyone hard, including Russia. If Russia were ready to take this step, then it would have taken it even at the time of freezing the gold reserves, ”Tsarev notes.

Associate Professor of the Department of International Law at MGIMO Nikolai Topornin notes the legal complexity of the situation that has arisen.

– The current situation has no analogues, according to which it would be possible to predict how events will develop. Much will depend on the course of the Ukrainian special operation and how it will end, whether the parties will be able to come to any compromise. But logic tells me that the problem of restoring the Ukrainian economy will still be raised and will have to be solved. And its main aspect is at whose expense this restoration will take place. One can, of course, assume that the Ukrainians will do it themselves and with their own resources, but I believe they are counting on frozen Russian assets. $300 billion is a significant amount.

“SP”: – That is, the issue will not be resolved in the legal field?

No, it will be a purely political decision. International law does not yet have a mechanism to find a way out.

“SP”: – What will happen in the event of a complete halt in oil and gas supplies?

– So far, to be honest, I see no signs that the Russian leadership is ready to stop the receipt of proceeds from the sale of energy resources in order to create additional difficulties for the Europeans.

According to Doctor of Economics, Professor of the Department of International Finance of MGIMO Valentina Katasonovaconfiscation of Russian assets in favor of Ukraine and a harsh Russian response are quite possible scenarios.

– First of all, you should understand that Borrell is a puppet, he pronounces what is dictated to him from Washington. Like Europe, it was not on its own initiative that it froze our reserves, but on orders from across the ocean. And the decision to send the withdrawn funds in favor of Ukraine will also be made by it only after the signal from the United States and the decision of this country to dispose of our money in an appropriate way. However, it must be said that not all prominent representatives of American society support this step.

“SP”: – So far, it seems that there are no fundamental disagreements.

— Recently Professor of Law at the University of Virginia Law School Paul Stephen published an article on the subject, in which he pointed out that this form of seizure of assets would mean confiscation. To do this, the US Congress will have to violate two laws – “On the International Emergency Economic Powers” of 1977 and “On Foreign Sovereign Immunities” of 1976. In the article, he warned that there is always the possibility of retribution. After all, the military special operation will end sooner or later, after which Russia will want to return its money. But if it turns out that they have already been spent for those purposes that the US leadership considered necessary earlier, then they will have to be taken from the pocket of taxpayers. It can be added that the mentioned issue is still being discussed carefully in America, because they understand that the principles of the Constitution and international confidence in the dollar are being put under attack. This can cause a boomerang effect and many countries of the world will beware of keeping their reserves in the American currency.

“SP”: – How can you assess the possible complete shutdown of European consumers from the supply of oil and gas from Russia?

“I don’t quite understand why we didn’t do this at the end of February. It seems that we at the top cannot understand in any way: are we in a state of conflict or are we cooperating? Quite recently, a person with a respectable status told me: the most effective tool in the ongoing confrontation is not our planes or howitzers, but a gas valve. Moreover, this was not told to me by a representative of the military or the expert community on television, but by Gazprom.

* The Taliban movement was recognized by the decision of the Supreme Court of the Russian Federation as an extremist and / or terrorist organization, its activities in Russia are prohibited.

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