The United States intends to confiscate Russia's overseas assets, and the Russian side directly retaliates by ordering the freezing of American bank assets in Russia, and the financial war between Russia and the United States has escalated again, and what impact will this have on the current situation between Russia and Ukraine?
A few days ago, the U.S. House of Representatives passed a bill to aid Ukraine, which includes content that allows the Biden administration to confiscate billions of dollars of Russian assets frozen by U.S. banks in order to help Ukraine rebuild its economy.
After the passage of this bill, the Russian side immediately responded strongly, saying that if the United States did this, Russia would definitely retaliate in reciprocal terms. Then, on April 28, a court in St. Petersburg, Russia, ordered the freezing of the assets of JPMorgan Chase Bank in Russia.
JPMorgan Chase Bank, USA
It can be said that the financial war between Russia and the United States has once again escalated around the frozen assets in the United States. So, what kind of impact will this move have on the Russia-Ukraine conflict and even Russian-US relations?
First of all, from the perspective of the United States, this is another escalation of the means of the United States to use the dollar as a weapon and sanction other countries.
After the outbreak of the Russian-Ukrainian conflict, although the United States froze Russian assets at the first time, freezing and direct confiscation are two different things, to put it bluntly, the Russian-Ukrainian conflict will always end, if it is only frozen, then after the Russian-Ukrainian conflict is over, Russia still has a way to get back these assets.
But now that the U.S. House of Representatives has passed a bill to allow Biden to use these Russian assets that have been frozen by the United States, then according to the Democratic Party's support for Ukraine and the Biden administration's hostility to the current Russian government, as long as the U.S. Senate does not stop it, the Biden administration really dares to directly confiscate and hand it over to Ukraine.
U.S. Congress
More importantly, the movements of the United States may also affect the European Union, because before the outbreak of the Russian-Ukrainian conflict, Russia had almost shorted its U.S. bonds in order to avoid financial risks, and Russia's assets in the United States are not very large, but the funds in the European Union are very large.
Most of Russia's foreign exchange assets of more than $300 billion frozen in Europe and the United States are in the hands of European countries, and if the United States begins to formally confiscate Russian assets for aid to Ukraine, then the European Union may also follow suit.
This is a relatively major financial blow to Russia.
It is for this reason that the Russian side has shown itself to be very tough on this. Russian Foreign Ministry spokeswoman Zakharova said that Russian assets are inviolable, and if the West wants to confiscate Russia's overseas assets, Russia will definitely respond harshly to the West's theft.
Russian Foreign Ministry spokeswoman Zakharova
And Russian presidential press secretary Dmitry Peskov said that if the confiscation of Russian assets sets such a precedent, it will become "a solid nail in the coffin of the future of the entire Western economic system."
Whether Zakharova's direct threat of reciprocal retaliation against Russia, or Peskov's warning about the stability of the Western financial system, in fact, reflects the urgency of Russia's unwillingness to lose this property.
There is also a reason why Russia is now threatening reciprocal retaliation, and it also has some assets of Western financial institutions and banks in its country, but these assets are smaller than Russia's assets overseas.
If Russia and the United States really confiscate each other's assets, it will definitely be Russia's loss. In fact, there is still some room for the United States to fear retaliation from Russia, but that there are some concerns within Europe and the United States about the direct confiscation of Russian assets.
Central Bank of Russia
First of all, the United States, although the Biden administration has expressed its willingness to confiscate Russian assets to compensate Ukraine, domestic interest groups in the United States may not agree to do so. Because this move will affect not only Russia, but also other countries with US assets, and even the capital and chaebols of the United States itself.
Once the U.S. government directly confiscates and embezzles Russian assets, the rest of the world will inevitably transfer assets from the U.S. as much as possible, which will cause great harm to U.S. financial stability and even the dollar's status as a world currency.
At the same time, domestic conglomerates and capital in the United States will also be concerned about the expansion of the government's powers and responsibilities. The United States is a country manipulated by capital, and capital is the master of the country, and the government can be regarded as a "manager" invited by the consortium and capital.
If today, the Biden administration can confiscate Russian assets on the grounds of hostility to Russia. So will tomorrow be able to confiscate the assets of the US plutocracy on other grounds?
U.S. President Joe Biden
This involves the issue of "small government" and "big government", and the current "neoliberal economic thought" prevailing in the United States is still relatively resistant to "big government", to put it bluntly, the consortium does not want to give too much power to the government.
Secondly, from the EU's point of view, there are also variables. On the one hand, the United States is powerful and not afraid of retaliation from Russia, but is the European Union not afraid of it either?
Once the confiscation of Russian assets begins, it is to force Russia to completely turn around with the EU, and now the Russian-Ukrainian conflict is only limited to Ukraine, and Russia itself does not want to provoke the EU, but when Russian assets are confiscated and handed over to Ukraine, it is impossible to say.
There are also some countries within the EU that do not want to force Russia to completely fight with them, and more or less want to leave some opportunity to turn around, so naturally they may not be so fully in favor of confiscating Russian assets.
European Union
The most drastic measure discussed by the EU has been to hand over to Ukraine the interest accrued on frozen Russian assets.
On the other hand, as mentioned earlier, due to the deterioration of Russian-American relations, Russia has relatively few assets in the United States, and the United States has relatively little investment in Russia.
But the EU is different, before the outbreak of the Russia-Ukraine conflict, there was a lot of trade between the EU and Russia, so the financial institutions of both sides had a large amount of deposits in each other's banks.
Once the United States takes relevant measures and the EU follows, then Russia can naturally freeze the assets of the EU, which is an important loss for EU countries, especially for Germany and other countries that have traded frequently with Russia before.
Russian President Vladimir Putin
In this sense, the EU may also actually be reluctant to vassalize the United States and confiscate Russian assets. And if the EU does not follow, the billions confiscated by the United States are not worth mentioning compared to Russia's $300 billion in foreign exchange.
Finally, from the perspective of the Russia-Ukraine conflict, once the Biden administration really does this, it will inevitably further deepen the contradictions between Russia and Europe and the United States, and this will obviously have a further impact on the possible peace talks between Russia and Ukraine.