Better in their words…

We’ve been hearing about the crazy EU attempt to steal the frozen Russian assets for days now. I’ll be providing a transcript of Sean Foo’s comments on how this is likely to play out—spoiler alert: very badly—but first I’ll paste in a tweet that provides most of the FT article that I presume Foo was working from. That way you can compare a key voice for the Anglo-Zionist Empire with Foo’s take. My further remarks come at the end.

You really gotta wonder what these knuckleheads were thinking. As if Putin wouldn’t respond? Could they possibly believe their own propaganda?

— GEROMAN — time will tell –  — @GeromanAT

Dec 18

Russia may confiscate $127 billion in Western assets in response to the use of its frozen assets to aid Ukraine, writes the Financial Times.

This threat has alarmed countries such as Belgium, Italy, and Austria, and is being considered at the EU level, sources say.

According to the Kiev School of Economics, the Kremlin has already confiscated or frozen the assets of at least 32 Western companiesdue to previous disputes, resulting in losses of at least $57 billion.

Russia may confiscate local subsidiaries of European companies in accordance with a decree signed by Putin in September, which introduces an accelerated nationalization procedure. The Kremlin justified this decision as a way to quickly respond to “hostile actions” such as the confiscation of EU assets.

Belgian officials believe that Euroclear will be the first victim of Russia’s potential retaliatory measures, as its clients’ assets worth about €17 billion are still blocked there and are at risk.

The publication writes that 2,315 Western companies are still actively operating in Russia. These include the Russian branches of banks such as Austria’s Raiffeisen and Italy’s UniCredit, which made significant profits during the war and cannot withdraw them due to a ban on dividend payments.

According to the Kyiv School of Economics, foreign companies earned $19.5 billion in profits in Russia last year.

The confiscation of Russian assets could affect Western investorswho owned shares in Russian companies traded on the stock exchange before the invasion, as well as Western companies with stakes in Russian corporations or operating in the country.

Also at the beginning of the war, Russia banned Western investors from selling their Russian securities and withdrawing the proceeds. Dividends and coupons are held in so-called Type C accounts under Russian control. They can be confiscated.

BP’s dividends from its 19.75% stake in Rosneft, according to a former employee of the Central Bank of Russia, Alexandra Prokopenko, are likely to be about 340 billion rubles, and according to a court decision in 2024, JPMorgan had 243 billion rubles in Russian assets “mainly” in Type C accounts.

“This is one of Moscow’s trump cards. If Europe takes any action against Russia’s reserves, Russia can simply transfer the funds from Type C accounts to the budget,” said Prokopenko. “This gives them a source of direct income when they are experiencing a deficit and overspending on defense.”

This step also worries European countries and increases their doubts about the feasibility of issuing a reparation loan secured by frozen Russian assets.

Last week, the Italian government supported the EU’s decision to indefinitely freeze Russian assets, but also expressed concern about the potential risks of using them to finance Ukraine.

Italian parliamentarian Claudio Borghi from the ruling coalition party “Lega” warned of the consequences if the EU implements its plans.

“How can you think that the actual theft of another country’s money will not lead to further disaster?” said Borghi to FT. “The first consequence will be that Russia will feel entitled to confiscate all foreign assets.”

Pretty sharp guy. Pretty astute question. Duh!

Austria is also concerned that Moscow may attempt to nationalize Raiffeisen’s subsidiary, Austria’s largest bank, which earned $2.9 billion in revenue in Russia last year.

“This is uncharted legal territory, and, honestly, there is a growing lack of understanding of why the Commission simply does not conduct more negotiations with member states and, at least, make them feel that their concerns are being taken seriously,” said an Austrian official.

I think I can answer that one. The rulers of the Anglo-Zionist Empire don’t actually take the concerns of the little people seriously. At all.

OK, so that’s the lay of the land. Sean Foo moves on from there. I have to say, I find his views compelling. However, there’s a twist that I’ll try to get into at the end:

Furious Russia Threatens Banking Assets As EU Last-Minute $90B Loan To Backfire

Things are getting out of hand. Russia is really out for their money. I think it’s really important to realize things will never be the same again. Now, for the EU, they don’t want the conflict to end with a Russian victory. Plain and simple. Because the US plan is more or less a concession to Russia. And if Russia pulls the win, the entire superstructure of Europe will get called into question. It will be a humiliation. And a big overarching question will be this one. Did we destroy our own industries plus spend almost $200 billion and we still lose? It’s enough to shake every member and really get them to rethink their positions here. Now the EU as a bloc might not survive a defeat. The economy itself will be in shambles. And so the asset confiscation is more about their own survival than anything else. The Orban of Hungary understands how precarious the position is:

Orban: If defeat is baked into the cake, trying to prolong it with the frozen money will just make things worse. He wants more guarantees for the guarantees for what? The whole idea is a stupid one to take away the money of somebody. There are two countries which are in war. Yeah, it’s not European Union. Russia and Ukraine and somebody European Union would like to take away the money of one of the war party and then to give it to another one. It’s, it’s a marching into the war. So the Belgian prime minister is right. We should not do that.

What can go wrong? Firstly, the EU financial system will forever be suspect. No one will trust the entire system 100% and countries like China will not put money there. And the last thing you want is your money wrapped up in EuroClear or any other institutions for that matter. So even less demand for EU bonds and even less deal flow between companies. Just buying up stakes in European companies will have risk because it is physically there. If Nexperia could get seized, anything could literally happen. But for Russia, the damage has already been done. The Russian central bank has issued a fresh warning to the EU that compensation isn’t just coming from EuroClear. They will be using Russian courts to get their money, and the targets could be EU banks. The total amount Putin wants is the entire sum, $230 billion, which probably means all EU assets in Russia could be seized. The first targets would be the financial institutions and probably extend from there.

So Europe is now trapped. Belgium, they are in panic mode. The majority of the funds are held in their country after all. Putin will be going after the money 1,000%. And Brussels is still finding ways to use the trapped funds. Remember what we said earlier, the EU cannot afford a Russian victory. It threatens the entire survival of the bloc. Will Putin get all his money back from the EU banks? Well, he won’t get back $200 billion, that’s for sure. We cannot expect a total extraction of funds to happen. Of all the institutions there, only Austria’s Raiffeisen Bank and UniCredit of Italy has some exposure in the country. As we speak a Russian court is already ordering Raiffeisen to pay $400 million in compensation for EU sanctions. So the precedent has been set. Many EU banks that have given loans to Russian entities are still floating around as well. Those loans can also be seized.

Now, there has been speculation that Russia might go after EU assets in China and use Chinese courts, but I want to clarify something. I don’t think that’s going to happen. It puts China in a very tough position and actually hurts the Chinese financial system. It would damage Russia China relations. So, as much as that is an option, it probably won’t come true. But the real damage will come from the exit of EU banks from Russia. When EU banks exit, Chinese entities will come in and fill the gap. The Chinese and Russian financial system will be even more interconnected than before.

And let’s break this down. Russia today has a rare trade surplus with Beijing. They are selling more to China than what they are buying from the Chinese market. As a result, they have a ton of RMB currency. This used to be euros and dollars, hence the presence of Western banks in the past. But now Russian firms need to find avenues to invest the surplus of the Chinese currency. Doesn’t take a genius to figure out what China’s next move will be. More branches could be set up there to offer investment instruments to Russians. Not just giving loans, but absorbing Russian capital as well. Over 99% of bilateral trade has been dedollarized and done in local currencies. Sooner or later the war will end and after the dust settles only Chinese banks will be left.

The war has literally changed the entire landscape, not just in trade but financially as well. Take the metals trade between China and Russia. Copper sales to China have increased by 66% while nickel imports more than doubled. That means a ton of financing will have to be done. Companies importing and exporting the goods need funding. Now, Chinese banks also have a ton of dollar and euro reserves. So, even after the war ends, they can still handle trade financing in Western currencies. So, Russia can still trade with the West. And once the earnings go back to Russia, where will the entities stash their money? Russian and Chinese banks. Instead of EU bonds, it will be Chinese bonds that get bought.

And that’s why the EU seizure of the assets has multiple layers of pain. Yes, more countries will be scared to buy EU and Western assets. But underneath that, it changes the entire financial plumbing as well. The Russian economy and Chinese banks will be connected even more. EU banks will be nowhere in sight.

Meanwhile, the EU just drove themselves into a bigger ditch. The need to keep Ukraine afloat just reached a whole new epic level.Now, have you seen a broken system looking to raise more money? Well, here you have it. The EU has struck a last minute deal during the summit. After 15 hours of talk, they have decided to come up with $90 billion for Ukraine. It’s supposed to be a loan, but we know Ukraine doesn’t have the capability to pay it back. At the end, they will be revisiting the Russian assets again. I call this a payday loan using the Russian reserves as future collateral. But there’s already problems with this one. Only 24 out of the 27 EU countries will be participating in this joint borrowing. So there’s already dissension going on in the block. Some EU countries don’t want to burden their own economies. And if we dig into the details of the loan, we get even more details on what’s going on. The council has basically given Ukraine a free pass to the money. Russia is on the hook for the 90 billion euro loan. Now once the money goes to Ukraine, suddenly the entire bloc will be more motivated to tap the Russian funds. After all, who is the immediate backer of the loan? The EU taxpayer and people who will see their cost of borrowing head up.

Now this section is supremely important. The 90 billion loan will be given in 2026 and 2027. Ukraine will only repay this loan once Russia pays reparations. Do you see the conundrum the EU has sandwiched themselves in? It’s also dictating outcomes of the war.Whether Russia wins or loses is immaterial. Reparations will be paid. If not, the frozen assets are on the hook as collateral. Russia will most definitely reject these terms. Even the US is in a spot because their peace plan has been burnt to a crisp. Europe’s hold on Russia’s money just got tighter. It’s basically a vice grip.

The real damage, however, will be done to EU industries. Money that goes to Ukraine will be coming out of the real economy. Bond yields in Europe are already near record highs. It’s as if the rate cuts from the ECB never even happened in the first place. Across the board—from Italy to Germany and France—borrowing costs are flying up. How can they compete with China’s economy? The US also has a longer runway because of the dollar’s reserve status. The higher costs go up, companies from chips to automakers in Europe will get squeezed even harder. So this $90 billion black hole has consequences. Long-term, it will force the EU to revisit the Russian seizure again. Short term it would hammer down on critical industries—and leaders in the EU are beginning to panic.

Now, we’ve talked many times about how Europe has to work out their own deal with Russia. That’s perhaps the only way for their economies to survive in the immediate future. And if you can’t survive in the immediate future, don’t even talk about long-term. EU industries won’t be able to hang on. The EU used to sell a ton of exports, but the entire economy is highly dependent on imports because making stuff domestically is just impossible. The EU trade deficit with China is progressively getting worse. It has gone from 150 billion pre- pandemic to nearly 300 billion last year. In 2025 is going to get much worse. So a lot of EU treasure and savings are heading to China. And when you lose capital, how are you going to fund innovation? How are you going to find the money for R&D? You are giving your money to fund China’s R&D. Plain and simple.

That’s why we haven’t heard anything about an AI solution made in Europe. Really, have you heard of any EU AI model that’s making waves? Just just name me one, guys. I can’t even think of one. And that should tell you the future of the EU economy. Russian commodities have to come back. You need cheap energy to return. You need to reestablish trade with the Russians. And the longer you delay this process, the further you will fall behind the US and China. And of all people, Macron is beginning to see the light. He wants Europe to reach out to Putin over Ukraine. But therein lies the big problem. Will Russia really listen to any plea? Everything still circles back to the frozen assets. Until Europe drops the seizure and returns the money, it’s going to be impossible for Moscow to listen. The war will continue indefinitely and $300 billion won’t last as long as Europe thinks. I don’t think it will last two whole years.

Now in the grand scheme of things, the asset confiscation will establish Europe and the West as a big risk to invest in. Even elements in the US recognizes this. The only way to use the money is to get Russian approval through some sort of peace deal. Anything else is extremely risky:

Rand Paul: But confiscating their sovereign assets and giving them to Ukraine will only convince Moscow that there is no negotiated settlement to be had with Kiev. American leaders speak of a rules-based international order. But the theory that the United States can confiscate the assets of another country we are not at war with is legally fraught. Rather than compel respect for international law, our actions will demonstrate to our adversaries that we are flouting it. This bill will be used by the Kremlin to show the world that while Washington demands that others follow the rules, we are happy to break them when we see fit. In a multi-polar world, Washington can no longer expect to act with impunity, particularly when dealing with a nuclear power.

Ron Paul is exactly right. Trying to play games with the frozen assets will backfire. In this new multipolar world, the US and Europe cannot act with impunity. Over time, more money will leave the West. And once trust is broken, it can never be restored for a very, very, very long time. And this will boomerang and hammer demand for Western assets. It’s very likely that the US will break away from this seizure and let Europe dig their own grave. With this $90 billion loan, there’s no turning back now for the EU.

There’s problem with the US trying to “break away from this seizure”. As with all the other actions taken against Russia—like the sabotage of the Nordstream pipeline and the current attacks on Russian connected tankers—the seizure of Russian assets occurred with either the consent or, more likely, at the active suggestion/demand of the US. Russia and China are fully aware of this fact. For example, no matter whether US personnel were directly involved in the latest tanker attack, Russia knows these attacks don’t occur over US objections:

AMK Mapping @AMK_Mapping_

6h

The SBU published footage showing Ukrainian drones striking the Russian oil tanker “QENDIL” in the neutral waters of the Mediterranean Sea. It reportedly received critical damage as a result.

A Ukrainian source claims that the drones were launched from a base in Greece [i.e., from NATO territory], although this is very unconfirmed.

Obviously, all this is happening because—as Foo argues—the Euros are desperate to prevent Trump from “breaking away”. And yet, could this be happening without US approval or encouragement. Trump himself has renewed his previous threats against Russian shipping. His “peace” = ceasefire proposals have been wildly unacceptable to Russia, and appear to be based on wild CIA disinformation—cf. LJ today: CIA is Broken… Can it Be Fixed?—elements of which Trump himself has publicly repeated. The Russians are almost certainly aware that Trump is a frontman operating under circumscribe “rules of engagement” that the Deep State and Anglo-Zionists have dictated. As such, Trump is highly unlikely to take actions that are opposed by the Deep State—like, breaking away from the Euros. Yes, Trump needs to break away from Ukraine to realize his grand plans for AI tech supremacy, but it seems clear that the Deep State opposes any such pivot away from war. Worse, the Venezuela fiasco strongly suggests that Trump’s powers of judgment are sorely lacking or that he isn’t in control—or both. All this is being evaluated in Moscow and Beijing and Teheran.

The continued attacks on Russian shipping, Trump’s proposals to get a cut of Russia’s assets as his price for a ceasefire, what’s the likely outcome? Putin, in his latest statements, has been adamant that Russia will simply go ahead and win the war if the Anglo-Zionists don’t comply with Russia’s security demands for a comprehensive settlement. Lavrov has recently suggested that, in any event, Trump’s efforts to intimidate Venezuela into a regime change will complicate any sort of “deal” with Russia. My guess is that at a certain point—which we have either already reached or will reach soon—Russia, with Chinese support (no, that $11B aid package to Taiwan wasn’t helpful for relations with China) will be switching to a new mode, one of looking pretty actively for a pound of flesh not just from the Euros but also from “Daddy”.

I’ve maintained consistently that the Anglo-Zionists will not let go of their war of revenge against Russia—not short of total defeat. We may be getting to that point. Putin maintains that Russia has no aggressive intentions with regard to Europe, but his hand may be forced, just as it was forced in Ukraine. Sean Foo will need to factor that possibility in.