Page 23 - RusRPTApr23

international laws. While there are differing opinions on which proposal is most suitable, the common goal is to find a solution that both adheres to international law and provides funding for the reconstruction of Ukraine.
International law makes it “challenging” to confiscate Russian state assets outright is the almost universal refrain amongst EU policymakers. While the starting point is broad-based immunity, the extent to which international law compels states to grant it is in question. Therefore, policymakers are cautious about remaining within the limits of international law.
Canada has been the first to amend its legislation last summer to allow the outright confiscation or forfeiture of foreign state assets when a “grave breach of international peace and security” has occurred. Europe remains reluctant to go so far.
As for “sweating the assets” for profit, that also carries some big dangers.
“Look again at the idea of taking temporary control of Russia’s reserves and “sweating the assets” for profits that would benefit Ukraine. If the assets have to be returned, what happens if the temporary investment management makes a net loss: should European taxpayers compensate Russia? As for making Russian reserves into collateral for new Ukraine debt, again the legal attraction is the temporary nature of the seizure. But what if Ukraine were to default and the creditors claimed their collateral? And if they can successfully claim their collateral, what would legally stop Russia today from pledging its immobilised reserves as collateral for a loan from a friendly third-country central bank?” Martin Sandbu is Financial Times's European economics commentator, said in a recent commentary.
Russia's foreign exchange assets mostly consist of other governments' liabilities, including deposits with western central banks and holdings of their public debt securities. Therefore, instead of confiscating Russia's assets, policymakers can selectively repudiate Moscow's financial claims on them. In technical terms, either can be done at the stroke of a pen.
“The EU’s self-image is bound up in it being a creature of the law and its sense that without the law it is nothing is, in my experience, palpable among its policymakers across the board (there is also an acute fear of the embarrassment of being ruled against by the European Court of Justice),” Sandbu said.
2.5 Russian budget already at 88% of 2023 planned deficit in February
The Russian federal budget deficit for January and February 2023 was almost RUB2.6 trillions by the Ministry of Finance, down by half from the record RUB1.76 trillion reported in January, but already 88% of the budget planned for the whole year.
23 RUSSIA Country Report Russia April 2023 www.intellinews.com