Russia Sanctions Compensation Bill Advances in Close VoteJake Rudnitsky and Henry Meyer
Russia gave provisional approval to a law allowing the seizure of foreign states’ assets in the country after the U.S. and its allies targeted President Vladimir Putin’s inner circle over Ukraine.
Lawmakers in the State Duma backed the measure by a vote of 233 to 202, with members of the ruling United Russia party in favor and deputies from the opposition Communists as well as the Kremlin-friendly Just Russia and the nationalist Liberal Democratic Party opposed. The bill needed 226 votes to pass and is subject to two more readings before it can advance.
“This draft law would allow a large number of Russian citizens and legal entities access to the state protection that they would have in Russia,” Vladimir Ponevezhsky, a United Russia lawmaker who sponsored the bill, said before the vote.
Lawmakers took up the bill after Italy froze about 28 million euros ($36 million) of property belonging to billionaire Arkady Rotenberg, whom the EU blacklisted in July. The law was criticized in social media as a bailout for the well-connected even as the economy nears recession.
“From a substantive point of view, the law essentially gives a budget insurance policy on foreign assets for billions,” Economy Minister Alexei Ulyukayev told reporters in the Duma earlier today. “we’re essentially encouraging capital outflows from the country in various forms, which is not a goal of economic policy.”
The U.S. and European Union have targeted individuals, companies and the finance, energy and defense industries to punish Russia for the annexation of Crimea in March and Putin’s alleged support for a separatist insurgency in eastern Ukraine.
Rotenberg, with a fortune of $2.3 billion according to the Bloomberg Billionaires Index, said he didn’t lobby for the bill or any other legislation and wouldn’t accept compensation from the Russian budget for his personal losses, the Interfax news wire reported Oct. 3.
Under the compensation bill, Russia would be able to use budget funds to compensate citizens or companies that had property outside Russia seized under an “unlawful” judgment by a foreign court. Russian courts would then have the right to go after foreign states’ assets in Russia, including property normally protected under diplomatic immunity.
“Why should we compensate people with yachts on the Côte d’Azur when we can’t support unborn children?” said Alexei Didenko, a Liberal Democratic Party lawmaker from Crimea. He was referring to a debate among Russian lawmakers whether to discontinue a program that provides cash payments to mothers.