/ world today news/ Countries that are now actively advocating the withdrawal of Russian funds frozen in foreign accounts would do well to remember Bismarck’s words that “Russians always come for their money,” says economist and writer Alexander Lezhava.
After the West imposed anti-Russian sanctions, most of the Russian assets that were held in foreign accounts were frozen. According to the representative of the European Commission, Christian Wiegand, more than 200 billion euros of assets of the Bank of Russia are blocked in the EU countries.
European officials have repeatedly talked about confiscating this money in favor of Ukraine. In particular, Ursula von der Leyen, the head of the EC, said that Brussels is preparing an appropriate legal framework for this, since under current European standards only the freezing of funds is allowed.
However, Belgian Prime Minister Alexandre Decroo called on the European Union to refrain from rash decisions that could have the opposite effect on them.
“We, together with the G-7 countries and the European Commission, are looking for a structural solution to the problem that does not destabilize the international financial system,” he noted.
“It is necessary to prepare a legal framework and it is clear that Belgium cannot do this alone,” Decroo added.
The host of “First Russian” Nikita Komarov drew attention to this statement, since the company Euroclear is located in Belgium, on whose accounts Russian assets are frozen.
And Belgium is already transferring the income received from our assets to Ukraine. To date, that amount stands at 1.7 billion euros and continues to grow, he said.
What should Russia do in such a situation? This question was answered by the economist and writer Alexander Lezhava on the air of the program “Tsarigrad. Main”.
“Russians always come for their money”
Nikita Komarov: Alexander, why do you think there is such a discussion in the West about Russian assets? They have been talking about it since February 2022. However, no concrete decisions have been made. Even regarding this situation with Ukraine. Do you think there will be any ending? Or will the situation remain unknown for now?
Alexander Lezhava: Belgium, Germany and France are quite cautious in this regard. They probably remember the story. At least these words that Otto von Bismarck, the first chancellor of the German Empire, said back in the 19th century:
“The Russians always come for their money. And when they do, don’t rely on the Jesuit agreements you signed that supposedly justify you. They’re not worth the paper they’re written on.”
Therefore, the Germans and the French understand how this will end.
If we look at those who are actively promoting the idea of withdrawing Russian funds, then in the first place it is Estonia. And there, on the territory of this country, there are about 35 million euros of Russian companies.
Let’s look at this amount from a slightly different angle and recall history. It is 1721 here. This is the end of the Northern War and the signing of the Ništad Peace Treaty.
As part of this agreement, Russia paid Sweden two million eufimki (two million silver dollars) for the acquired Livonia, Ingria, and Courland. That’s 56 tons of silver.
That is, the silver remained the same, the territory remained the same. If we calculate how much this is at the current exchange rate, then 56 tons is about 38 million euros. And as soon as Estonia withdraws these funds from Russia, it makes it possible for all this territory to be occupied on completely legal grounds.
We are now following the arrangements that were in place. But as soon as this property is confiscated by the Estonian leadership, these agreements will be violated.
And the Estonian leadership will pay for the return of these lands to Russia. And how they will share it with the leadership of Latvia and Lithuania is their problem.
– Alexander, but now many will probably wonder that 300 years have passed since that moment and many other border recognition agreements have been signed. With Estonia, with other Baltic countries… Yes, there are certain demarcation problems there, but still. Russia recognizes these countries, they are in NATO. Is there any real legal basis for what you said, or do we need to clean up these bureaucratic components?
– I want to return to Bismarck’s words: “Russians always come for their money.” If any of them violates the agreements concluded with the Baltic countries, it is a violation on their part.
Because we stuck to existing agreements. In this case, we have every right to restore justice.
Why are we doing nothing?
– As for our response to the fact that they froze our assets and pushed out the Russian business that was present in these countries, I do not understand our half-hearted policy. On the one hand, we send dividends and bond coupon payments to C accounts.
Yes, some assets of foreigners in Russia are transferred to foreign management. Some businesses sell at a discount. On the other hand, payments on the foreign debt in favor of non-residents from hostile countries continue.
Regarding corporate debt, I want to clarify. And in this way, foreigners can leave the country, taking with them, if not the entire amount of the sale of their assets, then half. Can’t we just crack down? Why do we have such a half-hearted policy?
– Well, as Franklin Roosevelt, the 32nd president of the United States, said: “If something happens in politics, you can be sure it was meant to be.”
And since we’re paying that money, then either the Russian government doesn’t have the political will for a stronger response, or, you know, they’re not working in our country’s interest for some reason.
– In your opinion, which option corresponds more to reality?
“I believe there is no political will for a stronger response.”
– In this case, what needs to happen in order for all the actions I have outlined to be fully implemented? Because such situations really surprise me. On the one hand, we are talking about a geopolitical confrontation, about an open war that the West is waging against us. On the other hand, all these financial channels function and work clearly not in the interest of our country.
Capital flight last year totaled $240 billion. What to do with foreign assets on the territory of our country? Should we create an exchange fund, pay it off, give it away, or come up with something else?
– Until the issue of our assets abroad is resolved, Western assets should also be frozen. The Ministry of Finance and the Bank of Russia are responsible for monetary policy and international payments.
The Ministry of Finance is a department of the government. And if they don’t, in this case it’s the government’s decision. How can we influence this? Well, you can’t influence it. I can’t either.
– Yes of course.
“But we can express our opinion on this matter. I, like you, let’s say, am surprised that the Russian government continues to pay tribute to foreign companies, foreign countries. While huge reserves are frozen there. They could say that since you are frozen, get it all out of them.
– Yes. Moreover, all this has major negative consequences. For example, the devaluation of the ruble. In fact, it is a withdrawal of currency from the country. In addition, foreign debt is mainly denominated in dollars and euros, which are in short supply in our domestic market. And this has the most direct impact on the course.
Economic war with the West
– Alexander, I can’t help but ask you. Our inflation is accelerating. In general, this was evident when the ruble began to weaken. It is clear that the lag is 2-3 months.
And now in the fourth quarter we are at such a peak of acceleration. A meeting of the Board of Directors of the Bank of Russia will be held on December 15. And many banks are already predicting that they will raise the rate even more, almost to 17%.
Explain, is there a connection between the tightening of monetary policy, the increase of the base rate and the real contribution to the fight against inflation, to the strengthening of the ruble, to its stabilization? Or are these concepts so incompatible that there is no need to talk?
– Who is responsible for issuing the money? Bank of Russia. And when the Bank of Russia says it’s raising interest rates to fight inflation, it’s like the right hand fighting the left hand.
On the one hand, we are printing more and more rubles, on the other hand, we are starting to raise the interest rate and supposedly fight this inflation that we provoked.
Raising interest rates is not so much a fight against inflation as a stranglehold on the Russian economy. It did not work on the battlefield – we will solve this problem in this way, in a roundabout way.
Because the battles are fought not only on the battlefield, but also in the economic, financial, political and social spheres. In this case, it is one of the battlefields.
– So this problem comes directly from the economic plane?
– Of course, without a doubt! This is one of the elements of the war being waged against Russia by foreign countries. In this case, our financial services are not working in the interest of our country.
– You mentioned money supply growth. In your opinion, is this an inflationary factor or, on the contrary, is it good to saturate the economy with money? Businesses get the resources they need. And if so, they can increase production to satisfy the market with goods and services.
– We do not have a sharp increase in the volume of goods and services on the market. But the amount of money in circulation has increased. What happens to prices when the supply of free money increases? The same monetary inflation results. That is, the release of unsecured rubles by the Bank of Russia, which spills over into the commodity market and drives prices up.
And when they tell us we’re going to raise interest rates to fight inflation, that’s empty talk! You can slow down a little the money machine, the printing press that produces these rubles, and inflation will slow down. And this is an objective reality.
– I understood you. But, on the other hand, our economy is still poorly monetized. It is now somewhere around 58% of GDP. And that’s a small level. Despite the fact that 100-120% is considered average. Of course, we will not give China as an example. It is usually below 300%.
– Well, monetization can of course be increased. But then prices will creep up. If it increases and the production of goods and services grows faster than the money supply, this leads to either keeping prices at the same level or lowering them.
But in the current conditions, when the financing goes not so much to the production of consumer goods, but to non-productive purposes (for example, the production of weapons), then you have no resource to slow down this inflation.
It’s just accelerated by the fact that you’re paying the soldiers more up front, which is necessary. And also pay workers in military factories, which is also necessary.
But the production of arms is not a consumer good. It’s all spent. And these are generally wasted costs, unfortunately.
– I understand, thank you!
Translation: SM
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