Russia offers the EU an exchange of frozen assets: how realistic is the plan

“This is not a question of legal practice, but of the political will of the participating countries”

The Bank of Russia is ready to consider the possibility of a mutual exchange of assets blocked by the European Union and our country under mutual sanctions. Such a conclusion can be drawn from the statements of the representatives of the regulator, made in the framework of the last St. Petersburg International Economic Forum. But the authorities are ready to take this step only if the terms of the deal are equal for Russian investors. Why it will be difficult to translate this plan into reality – in the material “MK”.

The idea of ​​a “total exchange” of frozen assets has been voiced by the authorities for a long time. It appeared almost immediately after the introduction of the first packages of sanctions against our country. Recall that Russian capital was blocked after the start of the NWO, both public and private. According to the Bank of Russia, about half of the $612.9 billion of the regulator’s reserves fell under freezing. To this amount should be added the assets of private investors and large Russian companies, which also fell under the restrictions. True, in the EU they operate with much more modest amounts. Judging by the leaks in the Western media, the EU authorities actually managed to find only $80-100 billion of the total blocked funds.

At the same time, the Bank of Russia, speaking of frozen assets, means the accounts and operations controlled by it. The regulator claimed that as of the end of November, the assets of Russian investors in the amount of about 5.7 trillion rubles were blocked in the European depositories Euroclear and Clearstream. At the same time, the total amount of funds on special ruble accounts of type “C”, on which, among other things, income from securities owned by “unfriendly” non-residents is blocked, at the end of 2022 was approaching 600 billion rubles.

Almost immediately after the imposition of sanctions, the Central Bank began to make attempts to return the blocked funds, including through the exchange procedure. The head of the Bank of Russia, Elvira Nabiullina, at a press conference on April 28, noted that the Central Bank is aware of both single positive and negative responses to applications for unfreezing the assets of Russian investors in Euroclear and Clearstream, but there is no general trend towards unblocking. However, already on June 9, she said that she still considers the asset exchange scheme to be a working one.

A new round of discussion of this initiative took place during SPIEF-2023. On the sidelines of the forum, Nabiullina’s deputy Philip Gabunia pointed out that the mechanism for exchanging blocked assets between our country and the EU should be voluntary and provide equal conditions for Russian investors. “The main story is that it must be of the good will of both parties, so that one agrees to exchange for the other,” he stressed. But it is very difficult to create conditions for free expression of will. “In fact, the owners of these blocked assets are under pressure from their regulators,” Gabunia explained. – Here it is highly desirable to go on the track when it happens voluntarily. And our task now is to develop such conditions that will create an opportunity for investors to be able to agree on an exchange.” The main question is that the deal should have legal force and be recognized as valid, while the investors who concluded it themselves would not be prosecuted in their countries. It is important that Russian investors find themselves on an equal footing. “So that it doesn’t work out, who was the smartest, fastest, strongest, changed everything for himself, he’s done well, and the one who is weaker, he stayed on,” the deputy chairman of the Central Bank noted.

The experts differed in their assessments of how realistic the implementation of the proposed plan is. As Artem Tuzov, director of the corporate finance department at IVA Partners Investment Company, pointed out, the possibility of its implementation depends on the will of four parties: two business owners with blocked assets in the West and in the Russian Federation and two regulators. Considering that the Central Bank of the Russian Federation has expressed its opinion, it remains to find out the opinion of Western regulators and business, but so far it has not been announced. However, if agreements are reached, there will be no risks, since the exchange of assets means a change of ownership, to which there are no claims from regulators or the legislator in the country of exchange.

“To date, no mechanism has been developed for the return of these funds,” says Georgy Dudko, managing partner of the law firm Dudko and Partners. – Some companies initiated litigations in Russian arbitration courts and even received court decisions on them, but it is not clear what to do with them further. Doubts that the decisions of Russian courts will be enforced abroad, especially in the most hostile countries, are absolutely justified.” At the same time, it is necessary to try to return Russian assets in any case, but when the results appear is not a matter of legal practice, but of the political will of the countries participating in the negotiations.