Putin has a pot of gold. Republicans and Democrats want it removed

A bipartisan bill introduced this week aims to ratchet up the financial pressure by making it harder for Moscow to use gold to prop up the collapsing rouble. Existing sanctions have not directly targeted the approximately $130 billion in gold reserves of the Central Bank of Russia.

“It would tighten the financial vice,” Sen. Angus King, an independent from Maine, told CNN in a phone interview.

The bill, introduced by King, Republican Texas Sen. John Cornyn, Tennessee Republican Bill Hagerty and New Hampshire Democrat Maggie Hassan, would impose secondary penalties on any U.S. entity that knowingly deals in or transports gold from assets of the Russian central bank. It would similarly penalize US entities that physically or electronically sell gold in Russia.

“We’re proposing to cut one more lane and increase the financial pressure to get them to stop this brutal campaign in Ukraine,” said King, who praised the differing political backgrounds of the bill’s sponsors. “You’ve never seen such a bipartisan bill.”

Cornyn, in a statement this week, said the sanctions would target parties that “help Russia finance its war by buying or selling this blood gold.”

‘Slush fund’

The existing sanctions have already dealt a powerful blow to the Russian economy. Western companies are fleeing. The Moscow Stock Exchange remains closed. And the ruble is worth less than a penny.

The West took direct aim at Putin’s $600 billion war chest – the foreign exchange reserves Russia’s Central Bank has amassed in recent years that would have allowed them to ride out the storm of sanctions.

“Gold is part of this slush fund that Putin has built up in anticipation of sanctions,” King said.

At the end of June, Russia’s central bank held $127 billion worth of gold, or 21.7% of total assets, according to the Central Bank of Russia. Concretely, gold now plays an even more important role because the West has effectively frozen most of the central bank’s foreign exchange reserves.
This gold is stored in vaults on the territory of the Russian Federation, according to a recent report by the Central Bank of Russia.

US Treasury Secretary Janet Yellen warned on Thursday that US officials and their allies in Europe were considering new sanctions against Russia.

“At this point, we don’t see Russia giving up on the horrible war it started, an unprovoked invasion of the Ukrainian homeland,” Yellen said during a Washington Post live event. “In fact, their atrocities against civilians appear to be escalating, so it is certainly appropriate that we work with our allies to consider further sanctions.”

White House officials did not respond to inquiries about whether the administration supports bipartisan gold legislation.

Putin is “cornered”

King, a member of the Senate Intelligence Committee, says Putin made a ‘series of gross miscalculations’ with Ukraine, including underestimating Western unity and the impact of sanctions .

“We told him it was going to happen,” King said. “I don’t know if he didn’t believe it or if he wasn’t well advised, but I’m sure he didn’t anticipate the ferocity of the sanctions.”

Either way, King said Putin was “destroying two countries: Russia and Ukraine.”

“He’s cornered. He’s already lost this war,” King said. “Even if he wins a short-term battle by taking Kiev, there is no way he can hold Ukraine and absorb Ukraine into Russia because he has created hatred for Russia and him. -even that will last a generation.”

Among the economic consequences: Dozens of major Western brands are distancing themselves from Moscow, with everyone from McDonald’s and General Electric to Goldman Sachs and PayPal suspending all or part of their operations in Russia.

King said Western companies that haven’t backed down from Russia need to ask themselves if they really want to be associated with a “brutal regime that bombs hospitals.”

“There is significant reputational risk,” he said.


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