The West should confiscate Russia's currency reserves to help Ukraine while easing risk to US dollar's dominance, says anti-Putin hedge fund manager
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- Russian currency reserves should be confiscated and used to help Ukraine, Hermitage Capital CEO Bill Browder said in the FT.
- To avoid weakening dollar dominance, the US must be joined by others, the long-time critic of Vladimir Putin added.
- "This seems entirely morally logical. It makes financial sense. It would be an easy response to those complaining about the costs of this war."
The Russian central bank's frozen currency reserves should be confiscated and used to help Ukraine, Hermitage Capital Management CEO Bill Browder said.
He has been a long-time adversary of Vladimir Putin and advocated for the Magnitsky Act, a 2012 US law named after a Russian whistleblower that authorizes sanctions against human rights abusers.
And in a Financial Times op-ed on Thursday, he turned his sights on the $300 billion of Russia's dollars, euros and other reserve assets that were frozen last year after Putin launched his war on Ukraine.
While Russia no longer access to that money, no one else does either. But Browder argued those assets should be seized and put to use in the defense and reconstruction of Ukraine.
"This seems entirely morally logical. It makes financial sense. It would be an easy response to those complaining about the costs of this war," he wrote, adding that collective action is necessary.
If the US alone confiscated Russian reserves, that would risk the dollar's dominance in global finance, as countries would shift to other currencies out of fear that the same could be done to their foreign reserves, Browder said.
To avoid this, he argued that other countries with a reserve currency must join the US, leaving investors with little alternative.
He also pushed back on sovereign immunity — the concept that countries are protected from legal action in foreign courts — noting that Putin has already shifted international norms by attacking a peaceful country.
Russia's invasion has resulted in a minimum of $1 trillion in damage to Ukraine, he pointed out, and it's not an unreasonable proposal to use Russian funds to repair it.
"I believe the UK, the US, Canada, Japan, the EU and Australia all need to unify around this simple, viable proposal," Browder concluded. "That would go a long way to at least starting to repair the financial damage that Russia has wrought with this terrible invasion of Ukraine."
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Saturday, February 25, 2023
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