A Bad Idea Whose Time, Evidently, Has Come: Stealing Russian Assets

Photograph by Nathaniel St. Clair

Stealing other countries’ money is not Washington’s best look. It erodes confidence in the entire American financial architecture – the dollar, USD as reserve currency, U.S. banks, U.S. Treasuries – when that confidence already is at an all-time low. Yet it is exactly what Congress is poised to do. On February 15, GOP senator Rand Paul decried legislation allowing the White House “to confiscate Russia’s frozen sovereign assets in the United States and transfer them to Ukraine,” in an article in Responsible Statecraft. Moscow’s foreign assets, to the tune of $300 billion, were seized by the West after Russia invaded Ukraine in 2022. They shouldn’t have been.

This theft rang like an alarm bell through the financial capitals of the world, waking sovereign money managers to the fact that their wealth, kept in the West, or denominated in dollars, was hostage to Washington’s bellicose craze du jour. Because Washington always has one. There’s always some insufficiently “democratic” nation that Beltway mandarins target with either bombing campaigns or other brute force, and that has been the case for at least 30 years. And that has also been the excuse for sanctions and seizing the bank holdings and gold of nations from spanning the globe from Afghanistan to Venezuela. The U.S. behaved no differently when it came to Russia. But this time, Washington and the West stole A LOT of money.

For a while, some months back, close readers of financial news were treated to the opera buffa of the hapless West unable to locate the Russian assets it had frozen. There’s no more talk of that now, so I guess our rulers found them. In any event, the sachems in Washington did, and that was what Senator Paul objected to. This seizure, he charges, will boomerang. That’s a likely outcome, especially considering it’s what the central U.S. financial warfare, namely sanctions, on Russia did. Sanctions backfired massively. President Biden who crowed “the ruble will be rubble,” found himself face to face with skyrocketing gas prices, while Moscow pivoted, sold its energy to the east and came through with its economy not only intact, but humming along quite nicely.

This law, Paul wrote, will enable the president to confiscate Russian assets and have Ukraine use them for its reconstruction. “Confiscating Russia’s sovereign assets is an act of economic war.” Just like the U.S. blowing up the Nordstream pipelines was an act of outright war. They’re getting pretty sloppy over in the white house and on Capitol Hill about not provoking the nation with the most nukes ever. Maybe somebody should take a little time to instruct these war-crazed dimwits on geostrategic politics 101, Exhibit A: the Cuban Missile Crisis. Because yes, in addition to this financial chicanery and bombing pipelines, Washington blathers irresponsibly about F-16s (would they be nuclear-capable? Moscow asked) for Kiev and positions nuclear bombs in England. If the geniuses in Washington don’t think Kremlin officials notice it’s making war on them, we could all be in for some ugly surprises.

But it’s not just the U.S., of course. There’s a big push in the EU to legalize using income from frozen Russian assets, too. The only conclusion is that the rulers of the collective West have lost their minds, because the most recent Harris poll shows that roughly 70 percent of Americans want a negotiated peace between Ukraine and Russia, while Washington wages a financial war that makes such peace impossible. The numbers of pro-peace people in Europe are also increasing. “Passage of this bill will only reinforce the view of hardliners in Moscow,” Paul wrote “that Russia’s war lies not just with Ukraine, but really with the United States and the West.”

Well, I think the Kremlin already figured out that the white house is its adversary, but this birdbrain move could convince it there’s no peace to be had whatsoever with Washington. Worse, it could easily convince Russia’s close ally, China, to speed up the activity it’s been engaged in since the Donald “Sinophobic Rampage” Trump years, namely dumping U.S. Treasuries and dollars for gold. In fact, China’s gold imports in January increased 51 percent. And not just China. Other nations dump Treasuries and race for gold, too. More will conclude “that the United States can no longer be trusted as the guarantor of the global economy.” That’s called weaponizing the dollar.

And weaponizing it leads to de-dollarization, which, ultimately via inflation, slams Americans into the poorhouse. The other glaring omission in the so-called logic of stealing Russian assets is that Moscow can – and has said it will – retaliate. Russia has hundreds of millions of dollars worth of stranded Western assets in its territory. So, of course, if the West takes from Russia, Russia will take from the West.

Overall, this move smacks of desperation. Ukraine is losing the war, and the immensely corrupt Kiev regime has run out of money (though the recent infusion of $50 billion from the EU does help), Western populations are sick of supporting them, and legislation to do so has stalled in the U.S. House of Representatives. So why not do what Treasury Secretary Janet Yellen once called illegal, before she changed her mind – and seize Russian monies? For all the reasons just laid out. Most powerfully that it’s criminal. Washington will try to redefine what’s criminal, but Moscow and the rest of the non-western world won’t buy that. It’s called cooking your own goose.

Meanwhile, on the actual battlefield of blood and gore, a Kremlin military bigwig accuses Ukraine of dropping chemical weapons on Russian troops – compounds from the U.S. According to RT, on February 19, Russian lieutenant general Igor Kirillov charges that Kiev obtained and used banned chemical weapons from the U.S., dropping gas grenades via drone on December 23, 2023. The chemical “irritates the eyes and upper respiratory tract, and can cause skin burns, respiratory paralysis and cardiac arrest when used in high concentrations.” Naturally not a peep about this in the Western press, or similar incidents on June 15, August 3 and 11, 2023. Washington may well pretend these didn’t happen, or, if confronted, mutter nonsense about Moscow’s lies, but the fact is, it has surfaced in Russian media, the Kremlin is upset about it, and it does not, to say the least, advance the cause of reason, that is, peace negotiations. But hey, it got covered by the Hindustan Times, so those of us claiming a press blackout are clearly chicken littles.

Then on February 23, came news that couldn’t possibly, oh never! be connected to the west grabbing Russian assets – that Moscow had seized over $1 billion of a German firm’s, Linde’s assets. Whaddya think, Sherlocks in the white house? Could this Russian seizure have anything to do with the West’s filching Moscow’s money? Ya think? Linde apparently broke its contract with Russia when the EU began its sanctions campaign, so an arbitration court in the St. Petersburg and Leningrad Region ruled against Linde, letting this asset seizure go forward. I’m sure this won’t be the last such case, as the intellectual heavy-weights in the white house have just slapped sundry Moscow bigwigs with hundreds more sanctions in the wake of Alexei Navalny’s death.

And to repeat, those new sanctions come on top of heaps of others. One can only imagine what thoughts this spectacle provokes in the minds of, say, Chinese money managers, contemplating the next U.S. Treasury auction. They and other foreign investors might well decide not to buy USTs.  Then what? Nothing good for your average American. In fact, back on November 17, the Wall Street Journal bemoaned the decline in ownership of Treasuries by overseas private investors and central banks, which a decade ago claimed roughly 43 percent of U.S. government debt, but now a mere 30 percent. And if we Americans can’t sell our debt, we are rolling on an inclined plane to a barren, prickly place where we got bupkis. Ah, the joys of economic warfare.

Back to that German firm, Linde. Did the West appear at all chastened at the prospect of getting a dose of its own medicine? Not a bit. In late February, British Prime Minister Rishi Sunak urged his allies to hurry up and confiscate Russian assets frozen abroad. “We must be bolder in hitting the Russian war economy,” this dim bulb wrote for the Sunday Times. Bolder? As in Germany is deindustrializing due to such idiotic financial moves and Britain’s an economic basket case, while this supposedly bold assault on the Russian war economy has energized it to the point where it’s now become one of the most formidable on the planet? Bolder? Tell that to Western populations impoverished by their moronic leaders’ determination to expand NATO onto Russia’s doorstep, with multiple CIA stations and bunkers on the Ukraine-Russia frontier and to fudge – and then brag about it! – on the Minsk Accords. So far, we Americans have been affected arguably the least. But if this stupidity keeps up, our luck will run out, big time – and probably within the decade.

Eve Ottenberg is a novelist and journalist. Her latest book is Lizard People. She can be reached at her website.