Opinion: Russia – Western Business Knew the Risks

Russia seems to be rattled by growing momentum in the West towards the use of the $330 billion in CBR assets to support Ukraine in its fight against the unjustified and illegal Russian invasion of its territory.

So much so that the Kremlin has warned that any such move to seize the underlying assets would provoke retaliatory action by Russia to seize Western assets in Russia. Russia’s threats are not a surprise but should not be used as a reason to change Western policy.

First, they imply Russia is rattled. Moscow understands that the provision of $330 billion of CBR assets for Ukraine would be a game changer – it would assure Ukraine’s financing for two to three years to come and enable Ukraine to buy the full range of Western conventional military kit to enable its to defend itself and win the war. It would raise the stakes for Moscow – is Moscow actually prepared to continue this war for another two to three years and match Ukraine dollar for dollar, actually $330 billion of Russia’s own money?

Second, and note here that the West has found an asymmetrical lever to use against Moscow as Russian assets stranded in the West – state and private – amount to close to $500 billion, ten times the value of Western assets stranded in Russia. Actually, at risk Russian assets could be mutiples even of this given Russian capital flight has been in excess of $2 trillion since the collapse of the USSR.

Third, the threat of retaliatory confiscation is rich when Russia has already confiscated numerous Western assets within its jurisdiction. Often, these assets have been confiscated by the Russian state and transferred at peppercorn rates to Putin’s buddies.

Fourth, and really the most substantive argument, is that Western companies with assets now stranded in Russia long knew what kind of regime they were dealing with and what the risks were taking when they chose to remain.

They were long warned by their own governments and could themselves observe Russian malign actions way back to 2008 and the invasion of Georgia, but then Litvinenko, Salsbery, the annexation of Crimea in 2014, invasion of Donbas the same year, warnings of invasion from Western intelligence in 2021, the actual invasion in 2022, then Bucha, Mariupol et al.

Throughout this decade and a half period these companies had plenty of time to sell off their Russian operations, but instead many decided to double up and reap windfall profits. They now find themselves stranded, but that was because of their own bad investment decisions.

Why should they now be bailed out by Western taxpayers, in effect? Because remember here that if a decision is taken not to use immobilized CBR assets to fund Ukraine so as to protect Western business interests in Russia, then it will be Western taxpayers who then have to write the check to cover the financing hole to ensure Ukraine has the funds to defend itself and Europe.

It’s a clear moral hazard play of private business expecting a taxpayer bailout for their cock ups. And note here what this would amount to – that Western national security interests would be being put behind/subservient to the personal profit-based interests of some greedy Western businesses who reaped excess windfall profits from doing business with a fascist, murderous regime for far too long.

 Surely the interests of Western taxpayers, and our own security, should be put first.

Reprinted from the author’s tashecon blog. See the original here.

The views expressed in this opinion article are the author’s and not necessarily those of Kyiv Post. 

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