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Just last week presidential spokesman Dmitry Peskov called Russia’s fertility rate “catastrophically low” at 1.41 live births per woman, despite that being in the middle of the European average, and improving Russia’s demographic profile remains a central goal of Putin’s National Projects 2.1 programme.
2.16 Russia to introduce new rules to seize foreigners assets in Russia
Russia is currently discussing a legal mechanism to seize funds from frozen accounts belonging to foreigners. Officials calculate that even the existence of such a mechanism should reduce the possibility of Russian assets being confiscated in the West. In a worst case scenario, it will allow Russia to fight a new battle of the “confiscation war” in which Russia and the West seek to inflict tit-for-tat economic harm on one another.
A source told Interfax about the government’s plans earlier this month. And two sources confirmed to The Bell that the authorities are, indeed, drawing up a document that permits the seizure of foreign-owned funds in frozen accounts. It would be used in response to any attempt to seize Central Bank assets abroad.
The accounts officials have in mind are so-called Type C accounts. These are escrow accounts that appeared in 2022 on the orders of Russian President Vladimir Putinin in response to the blocking of Russian assets abroad at the start of the full-scale invasion of Ukraine. Back then, assets of Russian investors held in accounts at Russia’s National Settlement Depository (NSD) in Europe, and Central Bank assets in Western countries, were frozen. In response, Russia stopped foreign investors from withdrawing funds with the introduction of these Type C accounts.
These accounts are credited with interest and dividends paid out by Russian securities. But this money cannot be transferred out of Russia without the express permission of a government commission. In the meantime, it can only be used to purchase Russian government bonds, or pay taxes.
Type C accounts are an important part of the system of capital controls created in 2022 in response to Western sanctions and the seizure of Central Bank assets. Put simply, it was foreign investors who paid the price for the freezing of Russian assets. The Kremlin clearly hopes – at some point – to be able to exchange the funds held in Type C accounts for frozen Russian assets in the West.
Last year, Vladimir Chistyukhin, deputy chairman of Russia’s Central Bank, referred to Type C accounts as an “exchange fund,” and called for Russia to accumulate more of them. The term “exchange fund” is normally applied to prisoners or detained spies, who can be traded for Russians held in Western jails.
42 RUSSIA Country Report August 2024 www.intellinews.com