Russia is preparing to take legal action to challenge the freeze on its $600bn (£462bn) foreign currency war chest put in place by western governments after the invasion of Ukraine, the head of the country’s central bank has said.
Elvira Nabiullina said plans were being made to launch lawsuits after governments including the US, UK and EU froze the Russian central bank’s foreign currency reserves held within their jurisdictions.
“This freezing of gold and foreign exchange reserves was unprecedented, so we are going to work on legal claims, and we are getting ready to put them forward,” Nabiullina was quoted as saying by the Kremlin-backed Tass news agency.
“This block on the gold and foreign exchange reserves of such a large country is unprecedented on a global scale.”
Viewed as the toughest economic sanction imposed on the country after Vladimir Putin’s invasion of Ukraine in late February, the asset freeze is designed to prevent Russia from softening the blow to its financial system and wider economy from a range of other economic penalties.
Russia had built up more than $600bn worth of foreign currency reserves held in dollars, gold and other currencies, with about half believed to be frozen by the restrictions imposed on its central bank.
Built up over several years under a so-called “fortress Russia” strategy following the annexation of Crimea in 2014, the sanctions make it harder for the central bank to intervene in currency markets to defend the value of the rouble.
Nabiullina did not detail when or where a legal challenge could be made. Her comments follow a similar threat made by Russia’s finance minister, Anton Siluanov, who said earlier this month that the Kremlin would sue if the west tried to force it to default on its sovereign debt.
In one example of such a legal case involving central bank reserves, the UK supreme court ruled in December against a Venezuelan appeal to allow access to almost $2bn of gold it held at the Bank of England.
The rouble crashed in value by more than 40% after western governments first imposed sweeping economic sanctions, although it has recovered to pre-invasion levels over recent weeks. Without access to half of its foreign currency reserves, the Russian central bank imposed tight capital controls and raised interest rates in an attempt to bolster the currency.
Nabiullina appeared to suggest the sanctions were having an impact, saying there would be “no need for such draconian measures” if it had access to its $600bn war chest.
“We have introduced these currency regulations. I know that many enterprises also complained a lot in terms of foreign economic activity, when it was difficult to pay. But it was a forced measure. If we had these gold and foreign exchange reserves in possession, and had this part not been frozen, there would have been no need for such draconian measures on the movement of capital,” she said.
The central bank governor was added on Tuesday by the Canadian government to a list of sanctioned individuals alongside 13 other Russians including Putin’s two adult daughters. Marking the first time she has been personally singled out by a western government, the Canadian government said it was doing so to hold the Russian president “and his associates accountable for their complicity in the Russian regime’s invasion of Ukraine”.
