Research & Insights #48

Switzerland considers using Russian assets for Ukrainian reparations

Despite its tradition of neutrality, the Swiss Parliament has voted in favour of a series of motions enabling the government to elaborate an international legal basis for using Russia’s frozen assets to pay reparations to Ukraine. More than US$ 8 billion in Russian central bank reserves and assets are held in Switzerland. Since the start of the conflict in Ukraine, Switzerland has refused to send arms to Kyiv or to allow countries holding Swiss-made weapons to re-export them to Ukraine, yet it has aligned itself with the European Union’s economic sanctions against Russia. Switzerland has long been a preferred destination for wealthy Russians and their assets. According to the Swiss Bankers Association (SBA), banks hold between 150 and 200 billion Swiss francs (US$ 213 billion) of Russian clients’ money in offshore accounts.

Russia to expand trade with China via its Eastern railroads

Moscow wants to spend billions modernising its vast eastern railroads to facilitate trade with China. According to the Kommersant newspaper, the aim is to increase the annual transport capacity of Russia’s two longest railroads, the Trans-Siberian Railway and the Baikal-Amur Mainline, from 150.5 million tonnes of goods in 2023 to 210 million tonnes by 2030. These 13,500 km of railroad represent a vital axis for Russia’s foreign trade, linking its western regions to the Pacific Ocean and China. In 2024, Russia plans to spend 366 billion rubles (US$ 4 billion) to improve the infrastructure of the Eastern Section (“Eastern Polygon”) of the Trans-Siberian rail line. Trade between Russia and China reached a record US$ 240 billion in 2023. China supplies Russia with everything from clothing to machinery and cars, while Russia sells raw materials such as coal and aluminum.

Russia’s oil and gas revenues surged in February

Russia’s oil and gas proceeds rose by over 80% in February compared with the previous year, reaching 945.6 billion rubles (US$ 10.4 billion), according to the Ministry of Finance. This increase is due to the rise in crude oil prices and the country’s ability to resist Western sanctions. According to Bloomberg calculations based on this data, profits from oil and oil products, which account for 84% of total hydrocarbon revenues, have more than doubled. “The expected volume of additional oil and gas revenues for the federal budget is projected at 125.2 billion rubles (US$ 1.38 billion) in March 2024,” the Ministry of Finance said in a statement. Russia’s shadow fleet has enabled the country to create a parallel shipping structure capable of withstanding the shifting tactics and direction of Western sanctions, with hundreds of opaquely owned tankers plying complex routes.

Moscow Exchange’s net profit for 2023 soars

In 2023, the Moscow Exchange’s net profit rose by 67.5% to 60.8 billion rubles (US$ 655 million), compared with 36.3 billion rubles (US$ 391 million) the previous year, according to the company. Commission income rose to 52.2 billion rubles ($562 million) due to high customer activity, as well as the launch of new products and services, the exchange said, accounting for 50% of the exchange’s operating revenue structure. It’s worth noting that on 4 March, 2024, the MOEX Russia index exceeded the February 2022 pre-war value of 3,300 points for the first time. Whereas before the war in Ukraine, around 80% of floating Russian shares were held by Western investors, the market, characterised by low valuations and high dividends, is now growing organically, with dozens of IPOs for domestic and friendly investors.

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