Switzerland is increasing pressure on Russia, but not enough.

Switzerland refused to confiscate frozen Russian assets, but at the same time initiated proceedings to confiscate the assets of former Ukrainian President Yanukovych and joined the EU restrictions on crude oil and petroleum products from Russia and introduced a price cap on them.

“The right to property: a fundamental right”

A working group set up by the Swiss Federal Department of Justice has concluded that the confiscation of Russian assets would undermine the country’s constitution and the existing rule of law.

This is stated in a statement by the Swiss Federal Council.

“The expropriation of private assets of legal origin without compensation is not permissible under Swiss law. The confiscation of frozen private assets is inconsistent with the Federal Constitution and the prevailing legal order and violates Switzerland’s international commitments. Other countries have similar constitutional rights and guarantees,” the statement reads.

At the same time, the Federal Council emphasizes that regardless of the discussions on frozen Russian assets, it reaffirms its intention to continue supporting Ukraine in the wake of Russia’s aggression against Ukraine.

Earlier this month, the Swiss bank Credit Suisse announced that it had frozen more than $19 billion in Russian funds in its accounts. Only 4.32 billion of these funds belong to individuals on the Swiss sanctions list. The remaining 14.7 billion belong to people sanctioned by other countries. Some frozen assets belong to the Central Bank of Russia and the Russian state. In total, there are about $50 billion of Russian funds in Switzerland.

Confiscation of Yanukovych’s money

Nevertheless, on the same day, on February 15, the Federal Council issued a statement according to which administrative proceedings were initiated to confiscate Yanukovych’s frozen assets worth more than 130 million Swiss francs. The confiscated property will be returned to the ownership of Ukraine.

In this case, Switzerland’s position is that these assets are illegal, so they may be confiscated. 

“The object of the proceedings is to confiscate assets of politically exposed persons (PEPs) and their close associates that are presumed to be of illicit origin.”

Also, the statement points out that “In taking this action, Switzerland is supporting Ukraine. Today’s decision is entirely unrelated to the sanctions against Russia adopted in 2022.”

At the same time, there are reasonable doubts that all the funds of Russian individuals that Switzerland refuses to confiscate are legal and “clean”. 

Price caps for Russian petroleum products

Nevertheless, Switzerland is increasing sanctions pressure on Russia. The Federal Council recalled that on February 4, the EU imposed price caps on Russian petroleum products in response to Russia’s violation of Ukraine’s sovereignty and territorial integrity. The Federal Council has restricted prices for oil products from Russia since February 15.

“Services facilitating the trade, brokerage and transportation of products such as heating oil from or originating in Russia are now only allowed if the price is no more than USD 45 per barrel. The price for petrol, diesel or kerosene is capped at USD 100 per barrel. The purpose of these provisions is to mitigate adverse consequences on energy supply to third countries and reduce price surges driven by Russia’s military aggression against Ukraine, while also limiting Russian oil revenues,” the statement said.

The new sanctions came into force at 18:00 on February 15, 2023.

Sanction pressure on Russia is a necessary condition for the return of peace, security, and stability in Europe. However, the decision not to confiscate Russian assets is surprising. 

Given the oligarchic nature of Russian big business, and the close ties between the oligarchy and security agencies (e.g., the FSB) or their direct membership in Putin’s inner circle, there is sufficient suspicion to assume that there are funds of illegal origin among the assets of Russian individuals in Switzerland. Therefore, the same mechanisms and procedures could be applied to such funds as the Federal Council is prepared to apply to the assets of Yanukovych and his affiliates.

Photo: REUTERS/Dado Ruvic