Russia Policy Monitor No. 2633

PUTIN SETS HIS SIGHTS ON U.S. ASSETS
Russian President Vladimir Putin has signed a decree allowing Russia to identify and seize U.S. assets as compensation if Russian assets are seized by the United States. The move comes as the Group of Seven (G7) nations discuss confiscating approximately $300 billion of frozen Russian assets and repurposing them to better support Ukraine. Reduced foreign investment since the start of the Kremlin's war on Ukraine in February 2022 limits Russia's ability to retaliate somewhat; nevertheless, the decree suggests that the Russian government could soon target private investors whose assets remain within reach of Russian financial institutions. Moreover, under the new edict, Russian courts can now determine if property belonging to Russia has been illegally seized, and order compensation from U.S. assets pursuant to a governmental commission that will identify potential assets, including securities, for seizure. (Reuters, May 23, 2023)

MILITARIZATION OF THE NEW FRONTIER
The U.S. has expressed worries over a recent Russian satellite launch, which may showcase an expanded Russian capability to target nations providing aid to Ukraine. Pentagon spokesman Brig. Gen. Pat Ryder stated the satellite, which was launched into low Earth orbit, shares a trajectory with a U.S. government satellite. Russia has not commented publicly on the launch, but the issue has heightened tensions at the UN, with both nations accusing one another of militarizing space. Russia has previously cautioned that U.S. satellites aiding Ukraine could be considered legitimate targets for retaliation. (BBC, May 21, 2024)

A DIFFERENT KIND OF TIT-FOR-TAT WITH BEIJING
Beijing has reacted to U.S. sanctions on Chinese firms accused of aiding Russia's war effort by imposing its own measures against American defense companies, including Raytheon, General Dynamics, and Lockheed Martin. The Chinese Foreign Ministry recently announced the steps, which target ten business executives as well as other U.S. entities in the defense sector. The move follows the Biden administration's earlier sanctions on hundreds of firms, including 20 from China, for supporting Russia's military-industrial capability. While existing U.S. laws already restrict military technology sales to China, the new sanctions underscore growing tensions between the two nations – and how China's burgeoning strategic relationship with Russia is playing a part in them. (Newsweek, May 23, 2024)

POLAND FORTIFIES NATO'S FRONTLINES
Poland is investing $2.5 billion in beefing up its common border with Russia and Belarus, newly-installed Prime Minister Donald Tusk has indicated. Positioned on NATO's eastern flank, Poland plays a significant role in European security, and Warsaw is taking this job seriously. Work on the mega-project, dubbed "Shield-East," is already underway, and involves erecting military fortification to thwart potential aggression from either Moscow or Minsk.

"Shield-East" builds on a $400 million border wall put up by the previous Polish government of Prime Minister Mateusz Moraweicki to prevent cross-border migration from Belarusian territory. Tusk's new, more EU-focused government, however, has deemed prior investments to be insufficient. "We are opening a great project of the construction of a safe border, including a system of fortifications and of the shaping of terrain, (of) environmental decisions that will make this border impenetrable by a potential enemy," Tusk has said. "We have begun these works, to make Poland's border a safe one in times of peace, and impenetrable for an enemy in times of war." (Associated Press, May 18, 2024)

RUSSIA THREATENS THE UK
As the war in Ukraine enters its third summer, Western leaders have increasingly signaled they are amenable to Ukraine using foreign military aid to strike targets within Russia itself. This represents a break from the past, in which Western governments – including the United States – explicitly forbade Kyiv from using of Western-provided military assets on Russian soil for fear of escalating the conflict. In late May, for instance, British Foreign Secretary David Cameron stated that Ukraine has a right to utilize British weapons to strike targets within Russia. In response, Russian Foreign Ministry spokesperson Maria Zakharova threatened Russian retaliation against British targets both "on Ukraine's territory and beyond its borders." Russia also conducted training exercises involving tactical nuclear missiles earlier this month, citing Cameron's remarks as justification. (Reuters, May 23, 2024)

WESTERN BUSINESSES: NOT LEAVING AFTER ALL
Despite initial promises to exit or scale back their involvement in the Russian economy following the February 2022 invasion of Ukraine, more than half of foreign businesses remain within the country some two-and-a-half years later. According to the Kyiv School of Economics, more than 2,100 multinational companies are still present in Russia. For instance, although PepsiCo suspended the sale of their famed soft drink in Russia, it still operates a dairy business in the country, citing humanitarian obligations as justification. Moscow, meanwhile, is working to make it more difficult for such firms to depart, throwing up administrative barriers to foreign businesses selling their companies to Russian buyers. The most significant shift, however, is undoubtedly ideological; now that the war has entered its third year, the "moral imperative" for companies to leave Russia appears to have disappeared, replaced by the more practical question of whether they really need to do so. (Financial Times, May 28, 2024)