Indulgences for oligarchs, an argument against default and a new anti-Russian alliance

Western authorities may give Russian "oligarchs" the opportunity to pay off sanctions

The idea of ​​"indulgences for the oligarchs" at a meeting of G7 finance ministers in Germany was put forward by Canadian Deputy Prime Minister and Finance Minister Chrystia Freeland, the learned Associated Press . This is only an idea so far, but it is quite justified: the “oligarchs” themselves offered her a payoff from the sanctions, the Ukrainian authorities are also aware of it, the source of the agency said. The proposal kills three birds with one stone: the proceeds will be used to restore Ukraine, the withdrawal is difficult to challenge in the courts, and it will also allow wealthy Russians to disassociate themselves from President Putin.

• Freeland is an ideal candidate for such discussions - she is of Ukrainian origin, has worked in the Moscow bureau of the Financial Times and knows the richest Russians. Canada has imposed some of the toughest anti-Russian sanctions, and the minister herself recently considered it “perfectly right” to use Russian assets to rebuild Ukraine.
• Europe is interested in the proposal, writes AP. The fact is that EU laws do not make it easy to confiscate the frozen assets of Russians subjected to sanctions (now they have accumulated 10 billion euros). While the EU is trying to criminalize sanctions violations at the union level and make asset forfeiture a preventive measure, it is a long and difficult process. Voluntary ransoming removes obstacles and saves the authorities from lawsuits with a real prospect of losing.
• Theoretically, the size of the buyout can be of the same order as Russia's frozen international reserves ($300 billion). Here, AP cites an old report from the US National Bureau of Economic Research, which estimated the offshore assets of the richest Russians at $800 billion, about the same as the assets of all other Russians.
• If we assume that the "oligarchs" will give away half of this property, the amount will be less than Ukraine's recently announced damage assessment for three months of the "special operation" - five annual GDP, or $1 billion.
• Another potential effect of such a measure is to deplete the finances of "Putin's wallets", to which the AP, following the former CIA officer Alex Finley, lists many of the wealthy Russians. Dmitry Peskov said not so long ago that there are no oligarchs in Russia, and its entrepreneurs honestly earned the now frozen assets. Putin himself, in connection with the freezing of the Central Bank's reserves, said the day before that "stealing other people's assets has never brought anyone to good."

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Paragraph against default

The US Treasury Department's general license, under which holders of Russian sovereign bonds can receive payments from Russia, has expired, but Russia still has a theoretical opportunity to avoid a default, writes RBC .

In the documentation of all issues, there was a clause “Reimbursement in another currency” (Currency Indemnity): the obligation can be considered fulfilled when paid in rubles, if the recipient can immediately exchange rubles for dollars and he is compensated for transaction costs. This is not an ordinary or normal decision, but it will give Russia the opportunity to prove the absence of a default. Most likely, this will have to be done after the fact, since rating agencies, assigning a D rating to Russian obligations, will point to the limited convertibility of the ruble.

There are other clever ways to pay dollars to non-residents, for example, through conversion at the National Settlement Depository, but all of them will require additional efforts from investors. Why a default can wait for Russia in July and how it really threatens the economy, The Bell explained here .

What else happened

• The Italian Corriere della Sera has learned that British Prime Minister Boris Johnson has offered Ukrainian President Volodymyr Zelensky an anti-Russian alliance alternative to Brussels. According to his idea, the "European community" of countries that value independence and are irreconcilable to Moscow's aggression could include Great Britain, Ukraine, Poland, Estonia, Latvia, Lithuania, and later Turkey. There is no reaction from the EU yet.
• The United States is preparing to supply Ukraine with MLRS missile systems, which the Ukrainian side directly demanded, writes CNN. The main question is what kind of missiles they will be equipped with. If missiles with a range of 100 km roughly correspond to the “Points” already in Ukraine, then ATACMS missiles, which have high accuracy and a range of up to 300 km, will be a critical escalation, which the Biden administration has so far refrained from. This, for example, is the distance from Kharkov to Voronezh.
• The European Union is detailing plans in the event of a complete cessation of Russian gas supplies. It is already clear that in this case, a strict limitation of the industry that consumes 27% of gas raw materials, including chemical, food and glass, will be required. Exceptions will be for vital sectors of the food industry, as well as security and medicine.
• Due to the position of Hungary, the EU oil embargo against Russia will not be on the official agenda of the meeting of EU leaders next week. But it is possible that "diluted" versions of the ban on Russian oil will be discussed - for example, the exclusion of pipeline oil from it, or even a sixth package of sanctions without an oil embargo.