Vladimir Putin has signed a decree that aims to allow foreign investors with funds frozen in Russia to use them to buy blocked assets of Russians abroad after Russia’s invasion of Ukraine last year. This decree comes as the European Union is increasing its efforts to use frozen Russian assets for rebuilding Ukraine.
On November 8th, President Vladimir Putin signed a decree that offers a way for Russian investors to “exchange” their frozen assets abroad with the frozen assets of foreign companies in Russia. But foreign cooperation is not guaranteed.
Since Russian forces invaded Ukraine in late February 2022, Western countries have introduced a range of sanctions against Russia, blocking its banks from making international payments and freezing Russian assets abroad.
As a response to the sanctions, Russia locked some assets belonging to foreign investors and companies in Russia, these were called Type‑C accounts.
According to the new decree, Russian residents will be able to exchange their blocked assets abroad up to a value of 100,000 rubles (around 1,000 dollars) with funds from these accounts using a voluntary mechanism.
The owner of a Type‑C account, which is typically a foreign company, will then have the option of receiving the foreign share previously owned by the Russian investor abroad.
According to the decree, the terms of the auction will be set by the Government Commission for the Control of Foreign Investments, and the mechanism will be regulated by the Central Bank. Individuals will not be charged for the transactions.
Back in August 2023, Russia’s Minister of Finance, Anton Siluanov, said that more than 3.5 million Russian citizens have blocked assets that are worth 1.5 trillion rubles (16.3 billion dollars). The first steps will include planning to unblock accounts worth about 100 billion rubles.
However, there is no guarantee of foreign cooperation.
This decree can compensate retail investors for their investments frozen under Western sanctions and stranded at settlement houses such as Euroclear. This can also allow certain Western companies to retrieve their stranded funds from Russia.
TASS, Russia’s largest state-owned news agency, reported that the head of the Bank of Russia, Elvira Nabiullina, said “We believe that the system we have created will allow us to defend the rights of small retail investors.”
The decree mentions that these actions are being pursued in response to actions by countries and organizations referred to as “unfriendly and contradictory to international law.”
This comes as the European Union is increasing its efforts to utilize frozen Russian assets for Ukraine’s reconstruction.
The European Commission in November last year proposed to create a “new structure to manage frozen and immobilized public Russian assets, invest them and use the proceeds for Ukraine.”
