Federation Council prepares a controversial bill on foreign assets freeze

RUSSIA ENERGY / FINANCE - In Brief 06 Mar 2014 by Marcel Salikhov

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Russia's upper house of the parliament (Federation Council) prepares a bill on foreign assets freeze in response to possible sanctions from the US and EU. The proposed bill would allow president and government to confiscate foreign owned property, including property of private companies, according to Mr Andrey Klishas, a chairman of the upper house committee for constitutional law. It should be a 'symmetric response' to Western potential sanctions against Russia due to crisis in Crimea. The bill is not available publicly so it's impossible right now to tell about what assets and in which way are under risk. We think that it's a threat and implementation is unlikely. Potential sanctions against Russia probably will include suspension of cooperation in different areas like visas but nothing more serious. So the Russian response will not be needed. But even talks about such actions hurt domestic investment climate and increase sovereign risk premiums for all kinds of foreign investments. Another thing is that actual implementation will be seriously challenged. For example, large Russian private businesses are mostly owned by foreign offshores backed by final beneficiaries. So formally means that they will also become subject of the bill. We hope that rational approach among policy-makers will prevail and the bill will not appear on a public surface anymore.