By Elena Fabrichnaya
MOSCOW (Reuters) – Moscow is unwilling for now to discuss the unblocking of foreigners’ funds in Russia while its own sovereign and private assets remain frozen overseas, Deputy Finance Minister Ivan Chebeskov said on Thursday.
Around $300 billion of Russian financial assets, such as major currencies and government bonds, were frozen abroad, mostly in Europe, shortly after Moscow sent troops into Ukraine in February 2022.
Western countries are debating how best to exploit those assets beyond using the profits to guarantee loans to Ukraine.
In response, Russia has diverted foreign-owned funds in Russia to type-C accounts, access to which is blocked unless Moscow grants a waiver.
“We still have a large amount of gold and forex reserves and our private assets blocked by Western countries, in Western depositaries, primarily in Europe,” Chebeskov told reporters at a financial forum on Thursday.
Russia’s blocking of assets was a countermeasure, he said, and while Moscow does not expect its funds to be released, it would be inadvisable to liberate any funds and securities held in Russia.
“It is too early to talk about this,” Chebeskov said.
Chebeskov was repeating Moscow’s known position, but as high-level Russia-U.S. talks take place, markets and investors are on the lookout for any indication as to how Russia might approach negotiations.
In late 2022, the central bank estimated there were around 280 billion roubles ($3.23 billion) in type-C accounts, but Russia has since said the volume is comparable to the amount of Russian assets frozen abroad.
Moscow has acknowledged that it cannot match the West’s sovereign asset seizure and must target private capital instead.
Sergei Shvetsov, head of the Moscow Exchange’s supervisory board, said the removal of sanctions on Russia’s financial infrastructure should be part of any negotiations with Western countries and proposed that foreigners’ funds be released by allowing them to invest in Russian market securities.
The U.S. Treasury, when imposing sanctions on Moscow Exchange and its clearing agent, the National Clearing Centre (NCC), in June 2024, said it was “targeting the architecture of Russia’s financial system”.
Russia is asking companies to propose which sanctions Moscow should seek to have lifted ahead of talks with Washington, two Russian business people told Reuters, identifying curbs that hamper cross-border payment flows as the most painful.
Shvetsov said Russia must not grant foreigners free access to the Russian market without sanctions easing or its financial market sovereignty would be at risk.
($1 = 86.6955 roubles)
(Reporting by Elena Fabrichnaya; Writing by Alexander Marrow; Editing by Angus MacSwan)
