MOSCOW, Feb 7 (Reuters) - Russia plans to expand its ability to retaliate against Western asset seizures by introducing new legislation that could enable the confiscation of frozen funds belonging to foreign companies and investors, according to two sources familiar with the draft law disclosed to Reuters.
Approximately $300 billion of Russian financial assets, including major currencies and government bonds, were frozen abroad shortly after Moscow deployed troops to Ukraine in February 2022. Western nations have been deliberating on the optimal approach to leverage these assets.
A draft bill delineating the process for Russia to seize foreign property in response to comparable actions by other countries that have Russian assets was endorsed by the government's legislative activity commission this week. This paves the way for the bill to be deliberated in the State Duma, Russia's lower house of parliament.
The bill, devised by the justice ministry, builds upon a directive issued by President Vladimir Putin in May 2024 related to identifying U.S. property and securities as compensatory measures for any losses incurred due to the seizure of frozen Russian assets in the United States.
The proposed law would extend this provision to all designated "unfriendly states" that have imposed sanctions on Russia for its actions in Ukraine, as mentioned by the sources.
The enforcement of decisions would be through lawsuits initiated at arbitration courts by state entities such as the central bank, General Prosecutor's office, and government agencies. Foreign states that have confiscated Russian assets would be the defendants.
A source involved in the discussion of the bill mentioned that type-C accounts, which require permission from Moscow for access, may be the target.
This move could pose challenges for numerous foreign investors, both individuals and major U.S. investment funds, who have billions of dollars locked in these accounts.
In May of last year, Reuters reported that Russia might pursue this course as its capacity for commensurate retaliation has dwindled due to decreasing foreign investment.