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something that the West has been adamant it will not do for fears of sparking a direct conflict between Nato members and Russia that could lead to WWIII.
Technically the frozen $300bn still belongs to the CBR and it has been including the amount in its reports of Russia’s reserves. In March last year Russia reported a total of $605bn as reserves but as the sanctions bit and the CBR scrambled to stave off a financial crisis caused by multiple shocks to the economy, including the imposition of the SWIFT sanctions that were imposed only days after Russia’s invasion of Ukraine in February that cut Russia’s banks off from the international financial system, reserves rapidly dropped to a low of $540bn in September last year.
But a question mark hangs over the frozen £300bn, as the EU legal team says it can’t identify more than about $37bn of this money. The rest is missing. The EU said the problem is partly to do with the complexity of the way the CBR reports its overseas holding, but also said that the actual amount of CBR money in Europe could be significantly less than $300bn as that number was originally based on the CBR’s own calculations of its holding in Europe, not what EU banks were reporting. A pan-EU bank holding reporting system is now being set up to try and get to the bottom of this mystery.
At the same time, efforts to identify and freeze sanctioned Russian oligarch money is going slowly and so far only a total of $22bn has been identified and arrested.
Booming oil exports to Asia and extraordinarily high gas prices brought a flood of money into Russia which posted an all-time record current account surplus of $227bn at the end of the year – more than twice the previous all-time high of $120bn posted at the end of 2021.
Since September reserves have recovered to end 2022 at $567bn, a gain of $27bn and have now gained another $28bn. However, that is well short of the $227bn of current account surplus Russia earned in 2022.
Analysts say that some of the difference has simply been spent on funding the war and other large purchases such as building up Russia’s “ghost fleet” of oil tankers that can dodge sanctions.
As some 85% of Russia’s oil shipments that used to go to Europe now go to Asia and are presumably settled outside of normal banking channels, analysts speculate that the Kremlin is keeping large sums of money in the banks of friendly countries that are opaque. And in addition, Russian oil refineries have been exporting oil to their European refineries at very low prices but accumulating the profits from legally selling refined products on the European market at normal prices in their Europe based trading companies.
According to the calculations of Alexander Isakov, head of Russia and CIS
macroeconomics at Bloomberg Russia has accumulated an invisible $80bn slush fund abroad via these various means.
96 RUSSIA Country Report Russia April 2023 www.intellinews.com