FLASH
Shkruar nga Federico FubiniThe Kremlin will respond to German Chancellor Merz's idea to use frozen Russian reserves to finance Ukraine. The Tsar already has $150 billion in assets of European companies in his hands.
An eerie silence was heard from Moscow after German Chancellor Friedrich Merz, for the first time, signed off on a decision that is taking shape: to use Russia's frozen reserves to finance Ukraine, initially mobilizing 170 billion euros and eventually over 200 billion euros.
The issue of Moscow's funds dates back to the early days of the all-out war against Ukraine, when G7 leaders froze those accounts in dollars, euros, pounds and yen, taking them out of Vladimir Putin's hands.
The decision is likely to take effect between March and April.
The Kremlin's response
But now I am interested in other aspects, because Moscow's silence is deceptive. The Kremlin will respond. It will target and seize the accounts and possibly even the physical assets of companies operating in Russia from countries participating in the intervention of reserves, including at least sixty Italian companies if this decision is confirmed. Tensions between Moscow and European governments, already very high, will only increase.
Retaliations
Below I will explain why I fear that all this is inevitable and why the assets of European companies in Russia are already irretrievable; therefore, this is not the time for Italians, French, Germans or British to be afraid of threats of retaliation. The meaning of what is happening is increasingly clear. The withdrawal of the United States from the conflict, according to the decision of Donald Trump, as well as Putin's determination (supported by China) to pursue his ultimate war objectives, are pushing a part of Europe towards what it has never done in eighty years: exposing itself more and more - with money, weapons, industry and technology - to prevent the surrender of Ukraine; to prevent Putin from becoming an ever greater threat to us.
Russian reserves
The use of Russian reserves is one way to continue this effort, trying to prevent a revolt by European taxpayers, which would soon be exploited by populists of all stripes. But in reality, America's disappearance from this arena accelerates a further deterioration of relations between Europe and Russia, with financial and industrial consequences that were not previously well understood. Let's see.
Presidential decree
A draft presidential decree has been in Moscow, at least since the beginning of the year, that envisages the nationalization of the assets of companies in countries considered “unfriendly”. The novelty would be only the very large macroeconomic scale on which all this could happen. The rest is already obvious. In the last three and a half years, Putin, his government, or the judges it controls have already seized 103 companies or properties for political reasons, placed them under state control or transferred them to friendly oligarchs. These include the Russian assets of the French company Danone (transferred to the Chechen leader and warlord Ramzan Kadyrov), the Danish company Carlsberg, the Belgian company InBev, the German company Bosch, the American company Exxon Mobil and the Italian company Ariston. The latter was transferred to Gazprom, which returned them to Ariston after just seven months (last March).
The Value of Physical Goods
All of this is likely just a prologue to what will happen if and when Ukraine's use of frozen Russian reserves becomes operational this spring. A rough estimate circulating in Moscow-linked business circles puts the value of Western companies' physical investment assets in Russia today at around $150 billion; to this can be added the companies' bank accounts in "unfriendly" countries worth another $150 billion.
The cycle of revenge
In 2022, Putin forced reluctant Europeans to stop buying Russian gas. Today, he is fully capable and determined to seize the financial and material assets of Western companies as soon as Europe uses up Moscow’s reserves. There is no time left for all these companies to try to get out. For the Kremlin, The Bell notes, seizing the West will be a shortcut to covering the growing budget deficit in 2026, but at an astronomical price: with these expropriations, Russia will be cut off from international financial markets for a generation to come, falling increasingly at the hands and mercy of China. / Adapted with cuts from Corriere della Sera
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