While much of the world focused last week on whether or not the Federal Reserve was going to raise interest rates, or whether the Greek debt crisis would bring Europe to a crisis, the Permanent Court of Arbitration in The Hague awarded a $50 billion judgment to shareholders of the former oil company Yukos in their case against the Russian government. The governments of Belgium and France moved immediately to freeze Russian state assets in their countries, naturally provoking the anger of the Russian government.
The timing of these actions is quite curious, coming as the Greek crisis in the EU seems to be reaching a tipping point and Greece, having perhaps abandoned the possibility of rapprochement with Europe, has been making overtures to Russia to help bail it out of its mess. And with the IMF’s recent statement pledging its full and unconditional support to Ukraine, it has become even more clear that the IMF and other major multilateral institutions are not blindly technical organizations, but rather are totally subservient lackeys to the foreign policy agenda emanating from Washington. Toe the DC party line and the internationalists will bail you out regardless of how badly you mess up, but if you even think about talking to Russia you will face serious consequences.
The United States government is desperately trying to cling to the notion of a unipolar world, with the United States at its center dictating foreign affairs and monetary policy while its client states dutifully carry out instructions. But the world order is not unipolar, and the existence of Russia and China is a stark reminder of that. For decades, the United States has benefited as the creator and defender of the world’s reserve currency, the dollar. This has enabled Americans to live beyond their means as foreign goods are imported to the US while increasingly-worthless dollars are sent abroad. But is it any wonder after 70-plus years of a depreciating dollar that the rest of the world is rebelling against this massive transfer of wealth?
The Europeans tried to form their own competitor to the dollar, and the resulting euro is collapsing around them as you read this. But the European Union was never considered much of a threat by the United States, existing as it does within Washington’s orbit. Russia and China, on the other hand, pose a far more credible threat to the dollar, as they have both the means and the motivation to form a gold-backed alternative monetary system to compete against the dollar. That is what the US government fears, and that is why President Obama and his Western allies are risking a cataclysmic war by goading Russia with these politically-motivated asset seizures. Having run out of carrots, the US is resorting to the stick.
The US government knows that Russia will not blithely accept Washington’s dictates, yet it still reacts like a petulant child flying into a tantrum whenever Russia dares to exert its sovereignty. The existence of a country that won’t kowtow to Washington’s demands is an unforgivable sin, to be punished with economic sanctions, attempting to freeze Russia out of world financial markets; veiled threats to strip Russia’s hosting of the 2018 World Cup; and now the seizure of Russian state assets.
Thus far the Russian response has been incredibly restrained, but that may not last forever. Continued economic pressure from the West may very well necessitate a Sino-Russian monetary arrangement that will eventually dethrone the dollar. The end result of this needless bullying by the United States will hasten the one thing Washington fears the most: a world monetary system in which the US has no say and the dollar is relegated to playing second fiddle.
How Will Russia Respond To Asset Seizure Over Yukos Settlement?
Submitted by Andy Tully via OilPrice.com,
Senior Russian officials said Kremlin lawyers are studying France and Belgium’s seizure of Russian government assets in the two countries as part of a court settlement to compensate shareholders of Yukos, the privately owned oil company that was shut down by Moscow.
The Permanent Court of Arbitration in The Hague ruled in July 2014 that Russia owes $50 billion to the shareholders for confiscating the assets of Yukos in 2003, then Russia’s largest oil producer, and giving them to the state-run oil company Rosneft.
Yukos had been operated by Mikhail Khodorkovsky. Once he was the country’s richest entrepreneur but was arrested on charges of tax violations in 2003 and sentenced to prison in 2005. He was only released after President Vladimir Putin pardoned him in December 2013.
Khodorkovsky argues that the case against him and Yukos was merely revenge for his political opposition to Putin. The court in The Hague agreed, saying the case against both Khodorkovsky and Yukos was politically motivated.
The Yukos shareholders, represented by GML, Yukos’ former holding company, said it would be very difficult to persuade the Russian government to reimburse them. In fact, Russia has refused to pay the damages, so the shareholders persuaded courts in Belgium, Britain, France and the United States to enforce the ruling piecemeal.
The Russian news agency Interfax reports that former Yukos shareholders say they are owed $1.9 billion of Russian state property in Belgium. It wasn’t immediately known how much was owed from Russian assets in France.
Russian Economy Minister Alexei Ulyukayev said June 18 that France had frozen a small amount of money in bank accounts held by Russian companies and diplomatic missions at the local subsidiary of the Russian bank VTB. He said Belgium had served seizure notices to Russian state-owned lenders and other entities ordering them to declare assets belonging to the Russian state.
In Moscow, government spokesman Dmitry Peskov said Kremlin lawyers were “in the most careful manner examining all circumstances of the claim.”
An economic aide to Putin, Andrei Belousov, said in St. Petersburg that the actions by France and Belgium were politicized, but added, “We are concerned. We expect a number of countries to take similar measures.” Ulyukayev simply dismissed the asset freezing as unlawful.
The actions by France and Belgium come as Russia opens a key international forum on the investment climate environment in Russia in St. Petersburg, Putin’s hometown. Peskov said, however, that he believes the actions by Paris and Brussels were a mere coincidence.
“This has nothing to do with the investment climate in Russia,” the Kremlin spokesman said. “Business circles are interested in Russia, as evidenced by the guest list of the forum.”
Khodorkovsky, who now lives in exile in Switzerland, reacted to the reports about the frozen assets on Twitter, saying, “I expect that the money will be spent on projects that will benefit Russian society.”
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As we concluded previously, the response from the Kremlin so far:
RUSSIA SUMMONS BELGIAN AMBASSADOR OVER FREEZES OF RUSSIA ASSETS
RUSSIA: FREEZES OF ASSETS IN BELGIUM `UNFRIENDLY ACT’
RUSSIA MAY RESPOND IN KIND TARGETING BELGIAN ASSETS IN RUSSIA
“[Remove the violations], otherwise, the Russian side will be forced to consider taking adequate response measures against properties of the Kingdom of Belgium, including properties of the Belgian embassy in Moscow, as well as of its legal entities”
We imagine this will only serve to further inflame tensions between Russia and Europe amid escalating violence in Ukraine and an increasingly aggressive stance towards the Kremlin on the part of Washington and NATO.
Are their any French etc assets the Russians can seize? Can’t Russia shut off their oil and gas?