US$340 Billion Russia Central Bank Assets: Is “At Least A Portion” Then To “Should Pay” Now A Transition In Thinking By U.S. Treasury Secretary Janet Yellen? Or, Signal For More Taxpayer Borrowing?
Remaining Unconvinced…
Eleven Months For United States Secretary Of The Treasury Janet Yellen To Imply A Transition In Her Thinking From “at least a portion” To Using US$340 Billion In Russian Central Bank Assets For Ukraine.
If Secretary Yellen Authorizes Return Of US$38 Billion To Moscow, Result Will Be A Political Extinction Event For Biden-Harris Administration… And For Democratic Members Of The United States Congress In November 2024.
The US$340 Billion In Central Bank Assets Of The Russian Federation Frozen Earn Approximately US$9.3 Billion In Interest (2%) Annually- US$566.6 Million Per Month, US$18.8 Million Per Day.
G7 Foreign Ministers’ Position Is For US$340 Billion To “remain immobilized until there is a resolution”
Is That Really The Best They Can Do? They Fear More What May Happen Than What Has Happened. Profiles In Cowardice.
CNN
Atlanta, Georgia
16 April 2023
Fareed Zakaria: Let me ask you one question about Ukraine, about rebuilding Ukraine, resupplying it. It's going to take a lot of money. There are some who say this money should be taken from Russia's frozen central bank reserves. Would you agree with that?
Janet Yellen, United States Secretary of the Treasury: I think Russia should pay for the damage that it has done to Ukraine. So that's a responsibility that I think the global community expects Russia to bear. This is something we're discussing with our partners. But, you know, there are legal constraints on what we can do with frozen Russian assets. And we're discussing with our partners what might lie in the future, but I think that's the right thing to happen, that Russia should pay for the damages that it's caused.
Secretary Yellen (18 May 2022): “I think it’s very natural that given the enormous destruction in Ukraine and huge rebuilding costs that they will face, that we will look to Russia to help pay at least a portion of the price that will be involved.” Emphasis added.
G7 Foreign Ministers’ Communiqué
Karuizawa, Japan
18 April 2023
“We, the G7 Foreign Ministers of Canada, France, Germany, Italy, Japan, the United Kingdom (U.K.) and the United States of America (U.S.), and the High Representative of the European Union, underline our strong sense of unity as the world navigates grave threats to the international system, including Russia’s continued war of aggression against Ukraine. We are determined, consistent with our respective legal systems, that Russia’s sovereign assets in our jurisdictions will remain immobilized until there is a resolution of the conflict that addresses Russia’s violation of Ukraine’s sovereignty and territorial integrity. Any resolution to the conflict must ensure Russia pays for the damage it has caused.” Emphasis added.
Mr. Dimitry Peskov, spokesperson for the government of the Russian Federation, shared that confiscation and use of assets of the government of the Russian Federation for benefit of Ukraine would be “illegal, blatant, and of course requiring an appropriate response... It would be, in fact, outright theft.” Emphasis added.
If Jeremy Hunt, Chancellor of the Exchequer of the United Kingdom, and Secretary Yellen authorize the return of approximately US$31 billion and approximately US$38 billion, respectively, from their control to the Moscow-based Central Bank of the Russian Federation (CBRF), and other countries collectively do the same for their portion of the US$340 billion in frozen funds of the Central Bank of the Russian Federation, the result will be a political extinction-level event for those who do.
What to make of governments funding (with many borrowing on behalf of their taxpayers) approximately US$200 billion since 24 February 2022 to support Ukraine and then approximately US$340 billion is returned to Moscow? Can a politician survive the moments after they send the wire transfer? Resignation letters at the ready?
Among countries reported holding CBRF assets: France (US$74 billion), Japan (US$58 billion), Germany (US$55 billion), United States (US$38 billion), United Kingdom (US$31 billion), Austria (US$17 billion), Switzerland (US$8.3 billion) and Canada (US$16 billion) among other countries.
Reality Check for Secretary Yellen: What does Secretary Yellen believe will be the 2024 re-election prospects for Joseph Biden, 46th President of the United States, should he seek re-election, and in 2024 for the Democratic Party in the United States Congress (House of Representatives and Senate), when the United States Secretary of the Treasury is featured as concerned primarily with the potential impact from confiscating approximately US$38 billion in assets of the CBRF frozen in the United States because doing so may result in countries directing assets away from the United States and from using the United States Dollar for fear that they too could have central bank assets frozen, confiscated, and then transferred to third parties…. Rather than the taxpayers who are obligated to repay, with interest, government borrowings.
Secretary Yellen should be more concerned about the precedent permitting the armed forces of one country to invade the territory of another country and third countries will make payment for the damage inflicted. If there are no consequences for an action, what deterrent exists?
When a company does wrong in a country, the government of that country seeks restitution (criminal, civil) from the company- not from a company or companies located in other countries. Remember the Pottery Barn Rule: You break it, you own it.
If Secretary Yellen succeeds in absolving the government of the Russian Federation of its financial obligation to pay 100% of the damages inflicted upon the territory of Ukraine, then Secretary Yellen will have become the single most important, most valuable asset of the government of the Russian Federation- the US$38 billion agent of influence.
Inflation in the United States and other countries is in part a result of too much spending by governments and what results, expected and unplanned. To reduce inflation, reduce spending. Why then would Secretary Yellen advocate United States taxpayers borrow funds relating to Ukraine, adding to the annual deficit, and adding to the national debt rather than using the approximately US$38 billion in CBRF assets controlled by the United States Department of the Treasury?
Secretary Yellen will need to take account of the ubiquitousness behavior of members of the Verkhovna Rada of Ukraine as they travel the globe advocating for financial support for Ukraine regardless of the impact upon the taxpayers of those countries from whom funds are sought. They are focused, determined. One example, Kira Rudyk, a member of the Verkhovna Rada: “We cannot weaken our work on information and diplomatic pressure on our partners. Because every day people in the West have more and more other problems and activities where their efforts are needed. The EU and our other allies are already preparing for next year's elections. This time will be very unfavorable for us, Ukrainians, because during the elections, even those who do not take an extremely negative position towards Ukraine still express very radical opinions. And so everything we have to do, all the help that we have to get, we must achieve as soon as possible and by the time the partners enter the election campaign.” Ms. Rudik is misfocused. The more successful strategy would be to continue to appreciate the approximately US$200 billion that has been directed towards since 24 February 2022 towards Ukraine- and focus towards obtaining the US$340 billion in CBRF frozen funds.
Coincidently, in 2024 Ukraine will have its presidential election (March), Verkhovna Rada (Parliament) election (July), and Russian Federation presidential election (March). The United States will have its presidential election in November 2024.
What Logic Says… There’s US$9.3 Billion Ready To Go
The G7 Foreign Ministers’ position is no funds returned to the CBRF until the government of the Russian Federation has repaid Ukraine for all commercial, economic, and political infrastructure damage, including satisfying criminal court decisions and civil court judgements and (hopefully) reimbursed those governments whose taxpayers have provided (for some through borrowings) support to Ukraine.
But, unless the funds are delivered now for use by Ukraine, the problem persists as to who will be, and who should be funding commercial, economic, humanitarian, political, and military support for Ukraine? Two suggestions:
Daleep Singh, Deputy National Security Advisor For International Economics at The White House (2021-2022), suggested the government of the United States should “use the [CBRF] reserves [approximately US$38 billion] that we have immobilized at the New York Federal Reserve Bank, transfer them to [the government of] Ukraine and allow them to put them up as collateral to raise money.”
Using a 2% annual rate (which might be higher) the global interest earned since 24 February 2022 on the approximately US$340 billion in CBRF frozen funds is approximately US$9,933,333,333.00. Reviewing another way, the frozen assets are earning US$566,666,666.66 per month- US$18,888,888.88 per day. If governments do not want to impact the principal, what about providing the interest to the government of Ukraine?
Resignation And Retirement?
What happens when the United States Department of the Treasury publicly confirms to the United States Congress that it electronically transferred approximately US$38 billion to the Kremlin and then President Biden asks the United States Congress to borrow (and add to what taxpayers already owe) approximately US$38 billion to send to the government of Ukraine to make payment for what was done to Ukraine by the armed forces of the Russian Federation? Someone is likely resigning, and someone is likely retiring (to Delaware?).
LINK TO COMPLETE ANALYSIS IN PDF FORMAT
LINKS TO RUSSIA CENTRAL BANK RELATED ANALYSES