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Russia will not consider unblocking foreign assets held on its territory as long as the frozen sovereign and private assets of the Russian Federation abroad remain under sanctions.
This was stated by Deputy Finance Minister Ivan Chebeskov, Reuters reports.
What did Moscow say?
About $300 billion of Russian financial assets – including foreign currency and government bonds – were frozen by Western countries after Russia’s invasion of Ukraine in February 2022.
In response, Russia transferred foreign funds to “C-accounts”, which are restricted without Kremlin permission.
“Talks about unblocking are still premature,” Chebeskov said, stressing that Moscow does not expect its reserves to be unfrozen, but sees no point in unblocking foreign funds in Russia.
What does this mean for the market?
Chebeskov’s statement confirms the Kremlin’s tough stance, but it came amidst talks between the US and Russia, which is forcing investors to look for signals of possible compromises.
There are about 280 billion rubles (~$3.23 billion) in C-type accounts in Russia, but Moscow claims that this amount is already commensurate with the frozen Russian assets in the West.
The Kremlin acknowledges that it cannot respond to sanctions symmetrically, as its influence on international financial markets is much weaker.
Sergei Shvetsov, chairman of the Moscow Exchange’s supervisory board, suggests a compromise: allowing foreign investors to invest in Russian securities in exchange for a partial lifting of sanctions.
What does the Kremlin want from negotiations with the US?
Russia’s financial system should be included in the negotiations – Russian businesses are calling on the government to seek the lifting of sanctions that block cross-border payments.
The Russian Ministry of Finance is studying proposals from companies on which restrictions should be lifted as part of possible agreements with Washington.
Is a compromise possible?
Despite the official tough rhetoric, the Kremlin is looking for ways to ease the sanctions pressure, as Western restrictions have made international payments much more difficult for Russian businesses.
The key question is whether Washington is willing to make partial concessions if it helps to achieve greater control over the Kremlin’s financial flows.
