Can 1,962 Words From 11 Lawmakers Create Global Magnitsky Act 2.0, Unshackle US$340 Billion In Russia Central Bank Assets, Then Use For Ukraine? Ode To “Deep Throat.” Rada Member- Tone It Down.
Can 1,962 Words From Eleven Lawmakers Result In Global Magnitsky Act 2.0 And Unshackle US$340 Billion In Russian Central Bank Assets And Then Use Them To Support Ukraine?
Are You Listening Secretary Yellen? A “Portion” Does Not Cut It.
Shifting From Sanctioning Individuals And Entities To Freezing, Confiscating, Redirecting Sovereign Assets.
Will United Kingdom Effort Provide Political Incentive And Courage To Central Bank Leadership In Other Countries?
From “Deep Throat” During The 1972 Watergate Investigation… “Follow The Money”
Member Of Verkhovna Rada, Kira Rudyk, Advocating For Increased “Diplomatic Pressure” Towards Governments To Obtain Funding For Ukraine Because 2024 Elections In European Union (EU), United States, Other Countries Will Refocus Their Energies Inward. An Unwise Strategy.
On 7 February 2023, Sir Iain Duncan Smith, Dame Margaret Hodge, Liam Byrne, Sir Robert Buckland, Alicia Kearns, Layla Moran, Joanna Cherry, Colum Eastwood, Stella Creasy, Chris Grayling, and Tobias Ellwood submitted the three-page 1,962-word Seizure of Russian State Assets and Support for Ukraine Bill (SRSASU) in The House of Commons of the United Kingdom (England, Scotland, Wales, Northern Ireland). LINK To Bill Text
The SRSASU requires the Secretary of State of the United Kingdom “to lay before Parliament proposals for the seizure of Russian state assets to provide support for Ukraine; and for connected purposes.” The Secretary of State is The Rt Hon Suella Braverman KC MP.
If Jeremy Hunt, Chancellor of the Exchequer of the United Kingdom, and Janet Yellen, Secretary of the Treasury of the United States, 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 countries funding (and many governments 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), and Canada (US$16 billion) among other countries.
Excerpt from the bill: “BE IT ENACTED by the King’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:— 1 Duty to lay proposals (1) Within 60 days of the coming into force of this Act, the Secretary of State must lay before Parliament proposals for a Bill to provide for the seizure of 5 Russian state assets for the purpose of offering support to Ukraine and the Ukrainian people.”
Excerpt from the bill: “Vesting of Russian Central Bank reserves in the trustee for Russian state assets (1) Proposals under this Act must include provision about the vesting of Russian Central Bank reserves in the trustee for Russian state assets. (2) Proposals under subsection (1) must include provision— (a) 20 to give the appropriate Minister the power to issue a certificate (a “Seized Russian Central Bank assets certificate”) declaring the vesting of the Russian Central Bank reserves in the trustee for Russian state assets, and (b) to require a Minister, before issuing a Seized Russian Central Bank 25 assets certificate, to take such steps as are reasonably necessary to establish— (i) the amount of the Russian Central Bank reserves located in the UK; and (ii) who holds such reserves. (3) 30 Proposals under subsection (1) must also include provision about the content of a Seized Russian Central Bank assets certificate, including that— (a) a Seized Russian Central Bank assets certificate must identify the amount and location of the Russian Central Bank reserves which are to be vested in the trustee for Russian state assets; and (b) a Seized Russian Central Bank assets certificate may also identify— (i) proposed candidates for the appointment as trustee for Russian 35 state assets; and (ii) proposed candidates for the appointment to the advisory committee to the trustee for Russian state assets.”
Can SRSASU Be Banking Version Of Public Laws 112-208 And 114-328?
The Russia and Moldova Jackson-Vanik Repeal and Sergei Magnitsky Rule of Law Accountability Act of 2012 (Public Law 112-208), known as “The Magnitsky Act” imposes “sanctions with respect to foreign persons responsible for gross violations of internationally recognized human rights, and for other purposes.” The United States Congress “passed the Sergei Magnitsky Act to require the President to identify the person(s) involved in the detention, abuse, or death of Magnitsky, and the ensuing cover-up, or those responsible for gross human rights violations against persons in Russia. Identified individuals are subject to blocking of assets under U.S. jurisdiction, prohibited from U.S. transactions, and denied entry into the United States.”
The Global Magnitsky Act of 2016 (Public Law 114-328) was incorporated as Title XII, Subtitle F (sections 1261 through 1265) of the omnibus National Defense Authorization Act for Fiscal Year 2017 (NDAA FY 2017). The law “effectively globalizes the authorities of the 2012 law by authorizing the President to deny entry into the United States, revoke any already-issued visa, and block property under U.S. jurisdiction of, and prohibit U.S. persons from entering into transactions with, any foreign person (individual or entity) that the President determines · is “responsible for extrajudicial killings, torture, or other gross violations of internationally recognized human rights,” as defined at 22 U.S.C. §2304(d(1), against those working (1) to expose illegal activities of government officials or (2) to obtain, exercise, defend, or promote human rights and freedoms, including rights to a fair trial and democratic elections; or · is a foreign government official responsible for acts of significant corruption, a senior associate of such an official, or a facilitator of such acts, which include the expropriation of private or public assets for personal gain, corruption in government contracts or natural resource extraction, bribery, or the offshore sheltering of ill-gotten gains.” Important to note that “sanctions shall not apply to an individual as necessary for law enforcement purposes, or to comply with the Agreement between the United Nations (U.N.) and the United States regarding the U.N. Headquarters or other applicable international obligations of the United States.”
But, Washington… We Have A BIG Problem
Janet Yellen, United States Secretary of the Treasury: “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.”
Yes, Secretary Yellen said that the government of the Russian Federation should “help pay at least a portion.” What is Secretary Yellen’s position on who should pay survivors of decisions by the government of Germany from 1939 to 1945 impacting the European Continent and North Africa, and the atrocities ordered by officials of the Hitler Administration?
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 decide to 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: “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.
The EU Funding Problem
The European Peace Facility are funds allocated solely by the twenty-seven country European Union (EU) to partially repay member governments for military equipment they have delivered to Ukraine. EU-based privately-owned financial institutions are cautious about providing funding for military-related procurement programs. The European Investment Bank (EIB) has restrictions upon providing military-related funding. EU-based military equipment manufacturers are seeking "insurance premiums" given the uncertainty of for how much time governments may need to maintain inventories and they, and their shareholders, do not want to be left with substantial capital investments and no sales. Individual EU-member governments have since 24 February 2022 continued to exicute procurement contracts with military equipment manufacturers- both those located within the EU and located outside of the EU.
What does all of this mean? The EU may have no alternative to issuing War Bonds- and the value could be US$500 billion to US$1 trillion. How will the approximately 400 million voters within the twenty-seven member EU countries welcome additional debt? The next elections are in 2024. Coincidently, in 2024 Ukraine will have its presidential election (March) and Verkhovna Rada (Parliament) election (July). The United States will have its presidential election in November 2024.
What Logic Says… There’s US$7.1 Billion Ready To Go
One workaround: 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 reimbursed those governments whose taxpayers have provided (for some through borrowings) support to Ukraine. Unless the funds are delivered 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$7,135,342,478.00. Reviewing another way, the frozen assets are earning US$558,904,131.60 per month- US$18,630,137.72 per day. If governments do not want to impact the principal, what about providing the interest to the government of Ukraine?
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.”
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 resigning and someone is retiring (to Delaware?).
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