Russian President Vladimir Putin has recently signed Decree No. 422 which permits Russia to seize US assets in compensation for any damages incurred from the seizing of Russian assets within the US. This specific decree appears to be a direct response following the US implementation of the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act that came into effect on April 24, 2024, thus enabling the US President with powers to seize or confiscate any of Russia’s state sovereign assets in the US.
Under this decree, the Russian government, as well as the central bank, can lodge a request in a Russian court to ascertain whether the seizure of their US assets was unjustifiable. The court could then potentially command that compensation be offered through the transfer of US assets or local property.
Potentially open to seizure are US securities, stakes in local businesses, real estate, and movable property and property rights. The decree extends further to incorporate assets of individuals under US control, albeit without defining what constitutes such control. Significantly, numerous assets of foreign investors, comprising US individuals and major investment funds, are held within special types of accounts labeled “type-C”, which were introduced by Russia in February 2022 following several Western sanctions enacted due to Russia’s invasion of Ukraine.
The Deputy Chairman of Russia’s Security Council, Dmitry Medvedev, recently stated that Russia possesses negligible amounts of US state property and declared that Russia could react by seizing private property, including real estate and movable property, in Russia, if the US were to make a move on the frozen Russian reserves.
More recently, this decree was signed while the G7 finance leaders met in Italy’s Stresa to discuss the possibility of utilizing frozen Russian assets worth $300 billion, following Russia’s invasion of Ukraine in early 2022. The US is now actively advocating for a solution which would allow future income from such assets to be diverted towards financing Ukraine’s war efforts.