Where is Russia hiding its money? Why EU authorities claim they can not find most of Russia’s foreign assets

Russian rubles

Several news outlets have published reports in recent weeks about the status of Russia’s foreign assets. According to these reports, EU authorities are not able to locate most of the Russian money stored in European financial institutes, real estates and enterprises. Since these news agencies are based in different countries and have a serious reputation, there is no doubt about the accuracy of their findings.[1]

It's a matter of common knowledge that Western governments imposed massive sanctions on Russia at the start of Russian president Vladimir Putin’s invasion of Ukraine in February 2022. As a result, about $300 billion in foreign reserves belonging to the Central Bank of Russia (CBR) were frozen but not seized by European governments. This was a severe blow for the Kremlin, since this sum represented about half of the CBR’s gross international reserves.

In addition, Western governments have also frozen assets belonging to oligarchs and other Russian nationals, albeit there are conflicting reports about the amount. The so-called “Russian Elites, Proxies, and Oligarchs” taskforce claims that the sum is about $58 billion, while other reports put the number much lower at about $20 billion.

However, experts believe the amount of oligarchs’ money in Europe is an order of magnitude higher and most of it remains untouched. Just the London homes of the top five oligarchs are worth more than $1 billion alone. In general, Russia’s total foreign direct investment stock in the EU is estimated to be €136 billion, according to Bloomberg.

There is a growing tendency among Western governments to want to bring the war to a close by pushing Ukraine to accept a kind of compromise with the Kremlin.[2] EU authorities are also considering seizing Russian assets to cover the costs of a post-war settlement. This is all the more important since Ukraine – a semi-colonial capitalist country – has been completely destroyed by Putin’ war of aggression and, at the same time, finds itself deep in debt.[3] While Western governments have lent limited support to Ukraine’s war of national defence, they are determined to get as much money out of it as possible. Since Kyiv is hardly in a position to pay for reconstruction and arms purchases, Western governments would like to cover their costs with Russian money.

However, the head of the EU taskforce, Swedish career diplomat Anders Ahnlid, admitted in a recent interview that Brussels faces huge difficulties in locating most Russian foreign assets. Until now, the taskforce could identify only a small portion of the frozen £300 billion. There are conflicting reports on how much Russian cash has been frozen – some reports claim that it is about $37 billion, while other unspecified EU authorities speak about only $22 billion, according to Bloomberg. The rest is mysteriously missing. At the same time, efforts to identify and freeze sanctioned Russian oligarch money are also going slowly and so far, only a total of $22 billion has been identified. 

Are Western governments really ignorant?

How can this be explained? The EU taskforce says that the problem is partly to do with the complexity of the way the CBR reports its overseas holdings. But it also said that the actual amount of CBR money in Europe could be significantly less than $300 billion. In addition, since a pan-EU bank holding reporting system is just now being set up, the taskforce depends on the reporting of individual nation states.

Nevertheless, it is very difficult to believe that the concrete location of hundreds of billions of CBR foreign reserves is a mystery for the EU authorities. This is not money belonging to an oligarch who has an understandable interest in hiding the amount of their wealth. A crucial purpose of foreign reserves of a central bank is to use such assets as “guarantees” for international trade and financial transactions. This requires a certain transparency of such foreign assets — the opposite of secretly hiding it at an unknown location.

Furthermore, as the recent Pentagon leaks show, the CIA (and most likely other intelligence agencies) are usually well-informed about all kinds of state secrets. If such agencies are able to intercept discussions within the Russian or South Korean government, if they know about Mossad’s intervention in domestic politics and Egypt’s plans to sell weapons to Putin, how on Earth could they be ignorant about the location of the CBR’s foreign reserves which has been accumulated over a number of years?

In addition, if Bloomberg knows about Russia’s total foreign direct investment stock in the EU, how could European authorities be ignorant about their location?

Contradictory political and economic interests

There is a much more likely explanation for the ignorance of the EU taskforce, which is related to the contradictory political and economic interests of Western governments. As long as they want to get their money back for their “unselfish” aid to Ukraine, they have an impetus to seize Russian foreign assets and hand such money over to Ukraine so that Kyiv can immediately pass it back to Western states and corporations.

On the other hand, individual Western governments also have other, opposite interests. First, individual banks and financial institutes might prefer to keep the money for themselves (don’t forget, private capitalists are, first and foremost, “patriots” of their own moneybag, not of their country).

Second, Russia is an imperialist power, and it will remain so irrespective of how the Ukraine War ends.[4] North American and European states will have to deal with the Kremlin in the future. Not seizing Russian foreign assets might be helpful to re-establish political and economic relations in the future in whatever form.

There is also another reason. Private property is sacrosanct in capitalism. IntelliNews notes: “Under EU law assets can easily be frozen, but they can only be seized if there is a criminal conviction of the owner. In the case of state-owned assets, those can only be legally seized if the two countries are officially at war.”

This is not only a legal issue but, more importantly, a political and economic issue. Anders Ahnlid, the head of the EU taskforce, hinted at this when he said: “It is a challenge to find legal means that are acceptable.” Seizing Russian foreign assets would have global and long-term repercussions. It would scare other foreign states and capitalists from transferring their money to European countries in the future. It could mean an end to Europe as a financial centre – at least for non-European investors. Western governments must break a sweat about such a nightmare scenario.

For all these reasons, European governments are thinking twice before seizing Russian foreign assets.

Some lessons

There are a few lessons that can be drawn from the strange difficulties of EU authorities to locate Russia’s foreign assets. First, it’s capitalism, baby! Slogans like “Justice for Ukraine” and “International solidarity” reflect the honest position of authentic socialists. But such words are pure hypocrisy when they come from imperialist governments in Europe and North America.

European governments are sitting on hundreds of billions of Russian foreign assets – both private and state-owned. But they are, at least until now, effectively paralysed by their contradictory interests. On one hand, they want to seize the money and pocket it for themselves (albeit disguised as “aid for Ukraine”). On the other hand, they fear that such a move would have negative long-term repercussions for their relations with Russia and foreign capitalists in general.

For these reasons socialists have no reason to support the (reluctant) efforts of European governments to seize Russian foreign assets. Why should we subscribe to a Great Power policy where one robber takes money from another robber?

However, this does not mean that socialists should be indifferent about the financial and economic needs of Ukraine – a country the Putin regime wants to eradicate as an independent state and is already destroying with brute force.[5]

Consequently, our Russian comrades, who have sided with the liberation struggle of Ukrainian people since the beginning of Putin’s invasion, support “the direct transfer of Russian assets to the Ukraine without any conditions or any intermediate force. The Ukrainian state should send representatives to Western countries in order to facilitate such a transfer. (…) Such assets should be used to cover the military expenses of the Ukraine as well as the costs of rebuilding the country. However, they must not be used to repay any debts. Quite the opposite: socialists in Western countries should call for the immediate cancellation of all debts of the Ukraine.”[6]

Of course, it would be foolish to have any trust in the bourgeois and pro-NATO government of Ukrainian president Volodymyr Zelensky. Socialists should advocate that Ukrainian workers and the popular masses take all transferred assets and aid under their control. The same applies to all military and non-military deliveries from abroad. As long as the Zelensky government remains in power, there should be public transparency of all financial transactions and spending so that the entire people of Ukraine can see it. 

Such an approach concerning Russian foreign assets is best placed to take into account both the necessity to strengthen Ukraine’s legitimate war of national defence against Putin’s invasion as well as the principle of intransigent opposition against all imperialist powers (Russia as well as NATO).

Michael Pröbsting is a socialist activist and writer. For some of his publications on Chinese imperialism and Great Power rivalry see: https://www.michael-proebsting.net/publications/bibliography/. He is the editor of the website http://www.thecommunists.net/


[1] See Intellinews: “Western efforts to freeze and seize Russian oligarch money going poorly”, 10 March 2023, https://www.intellinews.com/western-efforts-to-freeze-and-seize-russian-oligarch-money-going-poorly-272448/?source=russia; AFP: “‘Not easy’ to seize Russia assets, says EU task force head”, 25 March 2023, https://www.straitstimes.com/world/europe/not-easy-to-seize-russia-assets-says-eu-task-force-head, Stefan Beutelsbacher: “Europas heikle Jagd auf Russlands Staatsschatz”, WELT, 13.04.2023, https://www.welt.de/wirtschaft/plus244756304/Geld-fuer-Wiederaufbau-der-Ukraine-Europas-heikle-Jagd-auf-Russlands-Staatsschatz.html. All figures are drawn from these articles if not indicated otherwise.

[2] See RCIT: Towards a Turning Point in the Ukraine War? The tasks of socialists in the light of possible lines of development of the war of national defence in combination with the inter-imperialist Great Power rivalry, 11 March 2023, https://www.thecommunists.net/worldwide/global/towards-a-turning-point-in-the-ukraine-war/

[3] See Michael Pröbsting: “The Gigantic Destruction of the Ukrainian Society”, LINKS, 15 December 2022, http://links.org.au/gigantic-destruction-ukrainian-society. For a political and economic analysis of Ukraine, see Michael Pröbsting: Ukraine: A Capitalist Semi-Colony. On the exploitation and deformation of Ukraine’s economy by imperialist monopolies and oligarchs since capitalist restoration in 1991, January 2023, https://www.thecommunists.net/theory/ukraine-a-capitalist-semi-colony/

[4] See Michael Pröbsting: The Peculiar Features of Russian Imperialism. A Study of Russia’s Monopolies, Capital Export and Super-Exploitation in the Light of Marxist Theory, 10 August 2021, https://www.thecommunists.net/theory/the-peculiar-features-of-russian-imperialism/; by the same author: Lenin’s Theory of Imperialism and the Rise of Russia as a Great Power. On the Understanding and Misunderstanding of Today’s Inter-Imperialist Rivalry in the Light of Lenin’s Theory of Imperialism. Another Reply to Our Critics Who Deny Russia’s Imperialist Character, August 2014, http://www.thecommunists.net/theory/imperialism-theory-and-russia/Russia as a Great Imperialist Power. The formation of Russian Monopoly Capital and its Empire – A Reply to our Critics, 18 March 2014 (this pamphlet contains a document written in 2001 in which we established for the first time our characterisation of Russia as imperialist), http://www.thecommunists.net/theory/imperialist-russia/; see also these essays by the same author: “Russia: An Imperialist Power or a “Non-Hegemonic Empire in Gestation”? A reply to the Argentinean economist Claudio Katz”, in: New Politics, 11 August 2022, at https://newpol.org/russia-an-imperialist-power-or-a-non-hegemonic-empire-in-gestation-a-reply-to-the-argentinean-economist-claudio-katz-an-essay-with-8-tables/; “Russian Imperialism and Its Monopolies”, in: New Politics Vol. XVIII No. 4, Whole Number 72, Winter 2022, https://newpol.org/issue_post/russian-imperialism-and-its-monopolies/; “Once Again on Russian Imperialism (Reply to Critics). A rebuttal of a theory which claims that Russia is not an imperialist state but would be rather ‘comparable to Brazil and Iran’”, 30 March 2022, https://www.thecommunists.net/theory/once-again-on-russian-imperialism-reply-to-critics/.

[5] Michael Pröbsting: “Medvedev claims: ‘We need a Big Great Russia’. Putin’s hatchet man calls for Ukraine ‘to cease to exist’”, 13 April 2023, https://www.thecommunists.net/worldwide/europe/medvedev-claims-we-need-a-big-great-russia/

[6] Alexey Sedov, Nao Hong (she/they) and Michael Pröbsting: “Socialists Should Support the Transfer of Russian State and Oligarchs Assets into Ukrainian Hands! Contribution to a discussion among socialists on how to strengthen the Ukrainian resistance against Putin’s invasion without lending support to Western imperialism”, 15 December 2022, https://www.thecommunists.net/worldwide/global/russian-state-and-oligarchs-assets-into-ukrainian-hands/ and https://www.socialisttendency.com/post/socialist-sanctions-oligarch-requisition