Russia’s international reserves have risen to $611 billion, but nearly half have been frozen. According to the head of the Central Bank Elvira Nabiullina, Moscow is preparing lawsuits. Where can I turn to, what are the chances of success and whether this money will be given to Ukraine – RIA Novosti figured it out.
Squeezed out reserves
The Central Bank estimated the funds frozen in the West at $300 billion. All these are highly liquid foreign assets: monetary gold, special drawing rights (SD-Rs), reserve position in the IMF, currency. For 2021, gold reserves increased by 5.9 percent and reached 630.6 billion. The historical maximum of 643.2 billion occurred on February 18.
According to the annual report of the Central Bank, gold there is 21.5 percent, yuan – 17.1, other currencies – 61.4. The regulator noted that even after freezing the reserves are sufficient. In total, by the end of 2021, there were 481.4 billion in currency and 131.5 billion in gold.
Of course, Moscow intends to sue. “We will prepare lawsuits. <…> Because it is unprecedented on a global scale for the gold and foreign exchange reserves of such a large country to be frozen,” said the head of the Central Bank, Elvira Nabiullina.
It will be hard
Since the illegally blocked is in different Western banks, several lawsuits will be prepared. Moscow can apply to national authorities. For example, to the British High Court – its commercial division has the right to make decisions on the Bank of England. The same is true in the US and other countries. There is also the International Court of Justice and the Court of Justice of the European Union.
“For example, it would be worth proving in the EU Court the excess of the powers of the EU Council, since the legal system of the European Union does not provide for such radical and unprecedented actions,” argues political scientist Yevgeny Korolev.
According to observers, the chances of success are small, and the process itself will be lengthy and stretch for years. So, in the United States, no one has yet been able to challenge the freezing of assets: Libya tried to do this, the DPRK did not even try. “This is the specificity of the judicial system itself. There is case law in the USA and Great Britain, but there are practically no such precedents. In addition, now all verdicts of Western courts are politically motivated,” points out Valery Polkhovsky, analyst at Forex Club Group.
“Society is artificially inflated, opposed to Russia: illegal measures are presented as a good deed. But even if all this is discarded and a fair trial is presented, the prospects are incomprehensible. The reserves of Ir-an and Venezuela were fro-zen. I didn’t achieve it. It’s a very long story,” adds Vit-aly Tepikin, a member of the Association for Europ-ean Studies at the Russian Academy of Sciences.
Nevertheless, it is more than advisable to sue. The West deliberately created p-roblems with servicing Ru-ssia’s external debt, and this must be demonstrated. It is also necessary to defend one’s innocence so that this political instrument does not become habitual.
On a low start
The situation is further complicated by the fact that Kyiv is laying claim to Russian assets. As Deputy Minister of Economy of Ukraine Denis Kudin assured at the end of March, together with Western partners, “a confiscation mechanism is being developed.” And Oleg Ustenko, economic adviser to Vladimir Zelensky, argued that the funds of the Central Bank of Russia had allegedly already been reserved for Ukrainians. The UK then admitted that this could be “another measure” against Moscow.
But there are no precedents and no legal grounds for this. This would be a violation of all possible international norms. By the way, France, which also froze the assets of the Central Bank, said that it was not going to transfer them to Ukraine. Even here, however, the prospects are unclear.
“In any case, Moscow needs to apply to the international court. Most likely, the amount of blocked funds will be equated with the damage caused to the Ukrainian side. The calculations will, of course, be subjective and not in favor of Russia,” suggests Stepan Sumin, asset manager at Cresco Finance.
Analysts warn that if the anti-Russian alliance nevertheless confiscates Russia’s gold reserves, this will hit hard on the global financial system that has been built for decades. Large econom-ies will gradually abandon the management of reserves in foreign currency, since this does not fulfill the main function: to guarantee the stability of the state, said Ekaterina Bezsmertn-aya, dean of the Faculty of Economics and Business of the Financial University under the government.
Moreover, in this case, Russia will respond with harsh counter-sanctions: the nationalization of the property of British and American companies, the appropriation of intellectual property.