Why Didn’t President Putin Retrieve US$340 Billion In Central Bank Assets Prior To 24 February 2022? He Was Prepared To Sacrifice Them. So, Why Won’t Governments Confiscate Them?
Why Didn’t President Putin Retrieve The US$340 Billion Prior To 24 February 2022?
Freezing, but not seizing US$340 billion in assets of Central Bank of the Russian Federation (CBRF), of which more than 10%- approximately US$38 billion, is frozen in the United States, is viewed, incorrectly, by leadership of those governments who have frozen the funds as a means of maintaining, rather than reducing or eliminating an incentive for the government of the Russian Federation to negotiate a resolution to its war with Ukraine. This perspective is misguided.
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$26 billion), Austria (US$17 billion), and Canada (US$16 billion) among other countries.
Mistaken to adhere to a Potemkin-like belief that Vladimir Putin, President of the Russian Federation, will want returned all the US$340 billion- and that this desire might be persuasive enough for him to negotiate an end to the war.
The problem with this logic is 1) a belief that since 24 February 2022 President Putin believes the funds will be returned and 2) a belief that President Putin was not prepared to sacrifice those funds because of his larger agenda.
President Putin’s first belief enjoys ample justification given the reticence of leadership in governments to do anything to shift assets from cryostasis to confiscation nearing one month after the government of the Russian Federation directed the armed forces of the Russian Federation to invade and invade further into the territory of Ukraine.
Important to note that prior to 24 February 2022 neither leadership in governments nor central banks in those countries which held CBRF deposits issued warnings to President Putin that the deposits could be seized and then confiscated, or would be seized and then confiscated if the armed forces of the Russian Federation were to invade and invade further into the territory of Ukraine.
Prior to 24 February 2022, President Putin could have easily, and justifiably given what he perceived and in reality was hostility from the governments of countries which held assets of the CBRF, to have shifted all or a significant portion of the funds to Moscow or to countries which would likely have protected the funds- or at minimum fought to protect them, for example the People’s Republic of China, Republic of Turkiye, Republic of India, Islamic Republic of Iran among a few. He did not.
Such a movement of funds by the CBRF would certainly have been reasonably viewed as a possible signal of future intentions. However, a belief by others that the CBRF redirecting and re-accumulating funds held outside of the Russian Federation was a precursor to an invasion of Ukraine would not have justified seizure-in-advance of the funds based upon the belief in a possible intention. The creation of a financial-based version of the United States Constitution doctrine created in 1931 of Prior Restraint would not have been applicable.
Thus, a reasonable conclusion was and remains that the government of the Russian Federation was prepared to relinquish the funds as a cost of doing business.
Given this, how much leverage then exists in terms of continuing to freeze the funds of the CBRF rather than seizing the funds of the CBRF and redirecting them for Ukraine-related expenses, including for the reimbursement of thus far taxpayer-funded borrowing by governments to provide support for Ukraine?
