The EU is still calculating, but Moscow has gone one step ahead and immediately "paid a high price".

If the EU wants to use Russian assets to finance and continue to militarize Kiev, as well as rebuild Ukraine, they will have to pay back more to Moscow, the Kremlin "said".

Dùng tài sản Nga tại thiết Ukraine: EU còn 'đang tính', Moscow đã đi trước một bước, thẳng thừng ra giá. (nguồn: FT0

Using Russian assets in Ukraine: EU is still 'calculating', Moscow has gone one step ahead, bluntly setting the price. (Source: FT)

Moscow will seize the assets of EU member states it deems “unfriendly” if Brussels decides to “steal” Russian frozen asset funds to finance Ukraine, according to the latest “response” announced by a person close to President Vladimir Putin over the weekend.

Previously, President of the European Commission (EC) Ursula von der Leyen said on October 27 that the EU executive body is studying a proposal to pool some profits from frozen Russian state assets to transfer to Ukraine in the reconstruction process after the military conflict.

Vyacheslav Volodin, the speaker of the State Duma (lower house of parliament), said Moscow would retaliate in a way that would make the bloc pay more if the EU moves to take Russian assets, many of which are currently held in Belgium.

“Some European politicians, led by President Ursula von der Leyen, are once again talking about “stealing” our country’s frozen asset funds, in order to further militarize Kiev,” Volodin said in a statement on the Telegram app.

According to the Speaker of the Russian Duma, such a decision by the EC will certainly receive a proportionate response from the Russian Federation. In that case, many assets belonging to “unfriendly countries” will be confiscated, certainly more than our money that is frozen in Europe.

Last weekend, Ms. Von der Leyen said that the value of Russian sovereign assets frozen in the EU was now 211 billion euros ($223.15 billion) and reiterated that the bloc had decided that Russia must pay for the reconstruction of Ukraine.

Meanwhile, the EC President’s announcement after the recent EU Summit that the EU has decided that Russia must pay for the reconstruction of Ukraine is still controversial. The reality is that billions of dollars in Western profits are also stuck in Russia.

Just to mention the group of businesses headquartered in ‘unfriendly’ countries – these Western companies have continued to operate in Russia since Moscow launched its military campaign in Ukraine, generating billions of dollars in profits. However, the Kremlin is said to have blocked their access to this money, in an attempt to retaliate against 11 packages of sanctions targeting the Russian economy.

According to data compiled by the Kiev School of Economics (KSE), in 2022 alone, corporations from such countries accounted for $18 billion of the $20 billion in profits of foreign companies operating in Russia and $199 billion of the total $217 billion in revenue.

The figures may have increased significantly since then, as it is now November 2023. However, it is not possible to calculate exactly how much because most international companies operating in Russia only disclose their business results on an annual basis, said Andrii Onopriienko, deputy director of development at KSE, who compiled the data.

Meanwhile, earnings in Russia for companies ranging from Britain’s BP to America’s Citigroup are said to have been somewhat restricted since last year’s ban on dividends – imposed on companies from “unfriendly” countries, including the US, UK and all EU members – was imposed. While such transactions can be approved in exceptional circumstances, few withdrawal permits have been granted.

“Tens of billions of dollars are stuck in Russia. And there is no way to get the money out,” said the CEO of a major company based in a country considered “friendly.”

The sheer size of these revenues and profits reflects not only the long-term importance of Western companies to the Russian economy, but also the dilemma these businesses face in how to operate in an economy that is being isolated by their own governments.

Many foreign companies are trying to sell their Russian subsidiaries, but any deals require Moscow’s approval and come at steep discounts. In recent days, British American Tobacco and Swedish truck maker Volvo have announced deals to transfer their Russian assets to local owners.

According to KSE data, among companies with “unfriendly” origins still operating in Russia, in 2022, Austria’s Raiffeisen Bank reported the largest net profit, with about $2 billion.

American corporations Philip Morris and PepsiCo earned $775 million and $718 million, respectively. Swedish truck maker Scania's profit in Russia was $621 million, putting it in the top-earning group among companies that have announced their withdrawal from Russia.

Raiffeisen, the largest Western bank operating in Russia, said it had “no access” to its profits. Philip Morris declined to comment, and PepsiCo and Scania did not respond to requests for comment.

In fact, US-based companies generated the largest total profits of $4.9 billion, followed by German, Austrian and Swiss companies with $2.4 billion, $1.9 billion and $1 billion respectively, according to KSE data.

Source