Game with No Rules: Legal Imperialism against Russia (II)

Game with No Rules: Legal Imperialism against Russia (II)

Part I

Writing about Western legal imperialism I emphasized the fact that the West has launched a campaign aimed at expropriation of Russia’s assets abroad (state, private companies and banks, individuals). These activities will be intensified by adding all kinds of black lists, including legal entities and individuals of the Russian Federation, preparing for lawsuits abroad. 

Extortion by falsifying the history of the USSR

First of all, some former Soviet republics are preparing claims to make the Russian Federation compensate the «Soviet occupation of 1940-1991». Estonia, Latvia, Lithuania and Moldova are to take legal actions. The table below (made by the author) offers some estimates on the basis of using different sources. 

Table 1. 

«Soviet occupation» compensation claims put forward against the Russian Federation by some «near abroad» countries 

Country

Estimated damage

Date and claimant

Latvia

Over € 300 billion

September 2014. Ruth Pazdera, chair of the Latvian Society of the Occupation Researchers

Lithuania

$28 billion

January 2008. President Valdas Adamkus

Estonia

$100 billion

2004. г. Professor Velo Salo, Chairman of the Estonian

State Commission on Examination of the Policies of Repression (ESCEPR)

Moldova

$28 billion

2010. Moldovanhistorian Vyacheslav Stavile, head of the Commission for the Study and Evaluation of the Communist Totalitarian Regime of the Republic of Moldova

It’s worth to note that the estimates are regularly reconsidered to become higher. For instance, some years ago Latvia wanted a few billion dollars. Now its officials decided to go the whole hog and increased the estimates to $300 billion (for comparison: in 2012 the Latvian GDP was $28 billion). It’s clear that the sky high claim is coordinated with Western sanctions imposed against Russia. 

Kiev claims

Qualitatively new economic claims appeared in 2014. The damage estimates are expected to grow rapidly. The pace is set by the new government of Ukraine which illegally came to power as a result of the coup in February 2014. By the end of April 2014 Ukraine’s Minister of Justice Pavel Petrenko made public the following statement, «As of today, the sum of such losses makes up UAH 950 billion. These losses don't include lost profits that will be calculated additionally. Moreover, these losses doesn't include the cost of minerals, sea shelf and in fact these are losses which are direct and those caused by illegal seizure and creating barriers to use of property for our national companies, ministries and departments," the Minister stressed. Taking into account hryvna fluctuations the estimated sum was 84-100 billion dollars to be constantly increased afterwards. In June, 2014 it was $1, 08 trillion hryvna, in July – ₴1, 18 million. On July 28, Ukraine’s Energy and Coal Industry Minister Yuriy Prodan remarked that Russia’s March 18 unilateral «annexation» of Crimea caused massive energy asset losses to Ukraine (uapress.info, July 28). Prodan said, «Taking into account all the energy facilities in Crimea, we are talking about the loss to Ukraine of billions of dollars in the energy sector. We estimated about $300 billion» (Birzhevoi Lider, July 28). According to Kiev, the total compensation from Moscow is to be $400 billion. In 2013 the Ukraine’s GDP was $182 billion. 

At the same time Ukraine launched stock taking of the Russia’s property on its soil. More to it, Kiev started to use the argument of compensation for the Crimea refusing to pay its debts to Russia. The Crimean argument was used at the talks on Russian gas supplies to get larger discounts. 

In the summer of 2014 some Ukrainian members of parliament (Verkhovna Rada) started to prepare claims related to the events in Novorossia. The Verkhovna Rada estimated the sum needed to make up for the industrial damage. The figures mentioned are from $3 billion to $6 billion. According to the Ukrainian parliament estimates, the whole damage is estimated to be $8-10 billion. These sums are to be included into the claims to compensate the damage inflicted upon Ukraine as a result of «armed aggression». 

Final goal of compensation claims – confiscation sanctions

A compensation lawsuit of former Soviet republics against the Russian Federation is a multipurpose weapon of the West. 

First, it’s an instrument of waging ideological, psychological and information war used to falsify the history and blow up anti-Russian hysteria. 

Second, it’s a way to wage economic war. With all groundlessness and absolute incompetence, the estimated sums will probably become some kind of compensation claims to be approved by parliaments of the countries that have «suffered damage» before going to international courts. The verdicts are known in advance. 

When Russia refuses to comply with courts’ decisions, the West will launch a new wave of economic sanctions that have never been used as yet. They could be called confiscation sanctions. The reserves of the Russian Federation could be frozen (arrested, confiscated). If it won’t be enough, they will arrest (confiscate) the foreign assets. 

Should Russia prepare for «confiscation war»?

According to the Bank of Russia, on October 1, 2014 the foreign assets of the Russian Federation were equal to $1.410, 9 billion including direct investments - $ 466, 6; portfolio investments – $ 62, 7; derivatives - $8, 7 other – $471, 0; reserve assets (gold exchange) – $454, 2. Let’s see what «other,» the largest category, includes: currency cash and bank deposits – 161, 1; loans – 201, 4; trade credits and advances – 32, 5; other investments – 23, 3. It’s far from being all. 

The sum should be doubled at least. These are only legal capital investments registered by Central Bank. There are investments going abroad through illegal channels to be monitored by the West to be arrested upon courts’ decisions if need be. It’s easy to do. The range of pretexts is wide: «anti-American propaganda», «the encroachment on the gays rights», «the Soviet occupation» and «the unpaid debts of tsarist Russia». 

Taking into consideration how exacerbated the current stand-off between Russia and the West is, Russia should act immediately to take the foreign assets away from possible impact of confiscation sanctions. Something is done but too slowly and far from being enough. According to the Bank of Russia, the Russian foreign assets were equal to $1.514, 4 billion as of July 1, 2014. They lost only $103, 5 billion or 7% in the third quarter of the year. They say that if the West starts to confiscate Russia’s assets abroad then Russian will respond by confiscating Western assets on its soil. It’s not an effective measure. There is a disbalance between Russian asserts abroad and foreign assets in Russia. As I have already mentioned, the Russian foreign assets are equal to $1. 410, 9 billion against 1.178,0 billion. There is a disbalance of $232, 9 billion without shady Russian investments abroad to make the corresponding figure much higher. To at least avoid being a loser in the confiscation war, if not win, Russian foreign assets should be reduced to become less than foreign investments in Russia. 

What to do?

The situation necessitates rapid "deoffshorization" of Russian economy. It could be done by issuing a presidential executive order making mandatory the return of assets home. Physically they are here – materialized in industrial enterprises, railroads, blast furnaces, oil wells, power plants, minerals deposits etc. But de-jure these assets are in the West listed on the balance sheets of offshore or «parallel» companies. To avoid what happened in the case of Yukos, the assets should be returned to Russia de-jure without wasting time. A month is enough to re-register a company offshore; some legal consultants offer to make it urgently in 24 hours. Those tycoons and other entrepreneurs who are not ready to do it should be helped to take the difficult decision. It’s possible if the order states that if a company has not changed its registration in a month, its physical assets will be nationalized. The nationalization will not sharply deteriorate the relations between Russia and the West. The relationship cannot be worse anyway. And there is no time to lose. Nationalization is an important instrument of mobilizing society and economy in the times of «cold» and «hot» wars. 

The current relationship between Russia and the West very much resembles the situation in the first half of 1918 when former Entente allies were preparing for an intervention into Russia. There was the fifth column operating inside Russia represented by companies with foreign participation playing up to Entente and undermining the situation from inside. It made Bolsheviks launch the process of foreign property nationalization on Russian soil. Those days Russia stood against all odds. 

Tags: Russia  US  USSR 

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