The value of private Russian financial assets blocked in this country has fallen by 1.7 billion to 5.8 billion francs since November 2022. According to the federal government, the main reason is the poor price development of Russian stocks.
That needs to be explained. Almost a year and a half ago, the federal government reported that Russian financial assets of private individuals and companies totaling 7.5 billion francs were blocked in Switzerland as of November 25, 2022. According to a statement from the State Secretariat for Economic Affairs (Seco) on Tuesday, at the end of 2023 there were only 5.8 billion francs; and this despite the fact that the EU and thus also Switzerland had expanded the list of those sanctioned. In addition, there are 17 blocked properties in seven cantons (two more than in 2022) as well as luxury vehicles, works of art and furniture.
The decline in financial assets may also be surprising because many share prices have risen significantly since November 2022. Morgan Stanley’s world stock index and a broad European stock index (Euro Stoxx 600) rose. However, according to the National Bank’s exchange rate index, foreign currencies have lost value against the Swiss franc; The values for foreign securities converted into francs are therefore correspondingly lower. In addition, the market values of many interest-bearing securities have fallen due to the rise in interest rates.
Main purpose missed
According to Seco, there have been releases of initially blocked assets amounting to 140 million francs since November 2022. The EU has removed certain people from the list of those subject to sanctions – for example because those affected have died or the original reason for the ban could not be confirmed. According to Seco, the main reason for the significant decline is the sharp decline in the value of blocked assets amounting to 2.3 billion francs. This primarily concerns price declines, including currency losses, for Russian stocks in the blocked portfolios of those subject to sanctions.
The new people and companies added to the sanctions list since November 2022 have increased the volume of blocked assets by 50 million francs. In addition, investigations into the assets of previously sanctioned people and companies increased the volume of blocked assets by 580 million francs.
According to Seco, the price drops on blocked Russian stocks are an indication that the economic sanctions against Russia are effective. Hardly anyone doubts that Western sanctions are causing short and long-term economic damage in Russia. But compared to their official main purpose, the sanctions have so far failed: Russia has not come to its senses and is continuing its war of aggression against Ukraine undeterred even after more than two years. The economic and financial damage in Russia as a result of the sanctions has not yet been great enough to stop Moscow’s war machine.
According to information from Tuesday, Seco has so far received a good 340 reports of suspicion regarding evasion of the sanctions. These led to 50 administrative criminal proceedings, 34 of which were legally concluded.
7.2 billion from the central bank
In addition to Russian private assets, large assets of the Russian Central Bank are also on ice in the West. At the equivalent of around 300 billion US dollars, this item is far more important from a global perspective than the blocked private assets. Officially, the central bank assets are not blocked, just “immobilized,” but in effect it amounts to the same thing. Around two thirds of the blocked central bank assets are in the EU; By far the largest chunk is held by the central depository Euroclear in Belgium. At the end of February 2024, Russian central bank funds worth the equivalent of around 7.2 billion francs were blocked in Switzerland; This value has hardly changed compared to the only previous water level report from May 2023 (7.4 billion francs). The blocked Russian central bank assets in Switzerland are not held by the National Bank, but rather by private financial institutions.