Call it daylight robbery. In response to Russia’s 2022 invasion of Ukraine, which was in response to the US deep state sponsored attack on Russian majority provinces in Ukraine, Western countries have frozen a gargantuan $322 billion in Russian financial assets. A significant amount of these frozen assets are held in the form of government bonds that Russia’s central bank had stored as reserves. Plus, there are assets belonging to high-profile Russian oligarchs and elites. Their assets, including luxury properties, yachts, and other financial holdings in Western nations, were seized or frozen. This was part of the broader strategy to penalise individuals seen as benefiting from the Russian regime.
Freezing assets is simply a gateway to outright theft. Britain – which has approximately 300 years experience in colonial looting – has restated its long-standing position that Europe should move from just freezing Russian assets to seizing them. According to London, the seized Russian funds would be used to rebuild Ukraine. That’s ironically coming from a country that has refused to pay a single pound in reparations after looting $45 trillion from India.
Among the clutch of tools the West uses to apply sanctions is the little understood “assets freeze”. It is a term used so often in recent years that it qualifies to enter the dictionary as a synonym of greed.
This is how it works. Let’s say the US wants to seize the banking accounts, term deposits or other properties of a foreign country on American soil. To do this the US president simply signs a piece of paper known as an executive order, “freezing” the known assets of the targeted country. From that moment onwards those assets become the property of the US.
Now, the chances that the assets will be unfrozen depend entirely on the targeted country’s relationship with the West thawing. Since that rarely happens, Western governments can manage and enjoy stolen wealth virtually forever.
The Western proclivity for freezing assets – actually loot is a more correct word – is a reprise of wealth grabs stretching back to the Cuban Revolution. In 1963 the US passed the Cuba Assets Control Regulations to freeze all Cuban assets. But hundreds of millions of dollars idling in American banks proved to be too tempting. The Americans quickly discovered a neat way to distribute all that Cuban cash among themselves. Washington illegally tapped into those ‘frozen’ accounts and spent the money in lawsuits against Fidel Castro. According to the Cuban government, only $76 million of the original amount remains in American banks today.
Incidentally, just minutes before he signed an order banning all Cuban products from the US, President John F. Kennedy quietly purchased 1,200 Cuban cigars for his personal use.
It is the staggering scale of theft of Iraqi cash by the US that is the daddy of all robberies. Iraq – like other oil-rich countries – had deposited billions of petrodollars in Western banks, and these assets were frozen after Iraq’s 1991 invasion of Kuwait. How much was stolen is still being debated by the bean counters.
It was after the invasion of Iraq in 2003 that the Americans got the excuse they were looking for. The US flew in $40 billion in shrink-wrapped $100 bills into the war torn country. The first shipments took place in the year after the invasion – nearly 281 million banknotes, weighing 363 tonnes, were sent from New York to Baghdad. Using Hercules C-130 planes, the deliveries took place once or twice a month with the biggest of $2.4 billion on June 22, 2004. Subsequently, the US deployed jumbo jets to ferry the rest of the cash.
To comprehend the quantity of cash stolen here’s a simple illustration. The height of a stack of 40 billion $1 bills would measure 4,360 km. A column of bills this high would be more than 12 times higher than the orbiting International Space Station.
American diplomat Paul Bremer, the administrator of the Coalition Provisional Authority, showed inexplicable – and suspicious – zeal in making sure the money was distributed as quickly as possible. The billions splurged under his watch were supposed to rebuild Iraqi infrastructure – destroyed in the first place by the US-led war coalition – but even today Iraqi utilities and its once excellent hospitals are in shambles.
Another $18.7 billion remains unaccounted for. According to an Al Jazeera report, “Piles and piles of shrink-wrapped US dollars came here, but the cash coming in is not the important part – it is what happened to it after it got here. There are no documents to indicate who got it, where it was spent and what was ever built from it.”
An easy guess is American contractors, lawyers, soldiers, US Air Force pilots, banks, corrupt US diplomats and Iraqi politicians working for the West got very rich very quickly.
An even bigger stash looted was Libya’s. The North African country’s nearly $32 billion deposit and $19 billion worth of assets in the UK form the biggest sovereign wealth portfolio ever blocked.
In an article dated March 23, 2011, the Washington Post practically salivated at how it took the US just 72 hours to locate and block Libyan assets. The Western mouthpiece shamelessly boasted: “Instead of being a secondary measure, as in the past, economic sanctions have become a centerpiece of national security policy.”
The Department of Loot
The US actually has an entire department devoted to such illegal cash grabs. The Office of Foreign Assets Control (OFAC) is probably one of the most powerful American government agencies no one’s ever heard of.
OFAC’s targets are set by White House orders to use financial tools against a specific country, and it even has an eerily named Office of Global Targeting. According to StratRisks, “The 170-person sanctions unit within the US Treasury Department, comprising mainly lawyers and intelligence analysts known as ‘targeters’, has extraordinary powers – and the ability to interrupt dollar transactions worldwide.”
You are probably shaking your head in disbelief at how easy it is for the US to seize the wealth of sovereign countries. How could Muammar Gaddafi and Saddam Hussein, who ran two leading Arab republics for several decades, lack the basic common sense to keep their national wealth in safer places? Why did they choose to keep their money in the very countries they knew were out to get them? And how did the Russians not have the sense to liquidate at least some of their US Treasury Bonds before launching the invasion?
This is not a matter of academic interest but of pressing concern for countries that might be targeted in the future. India, for instance, has a massive $702 billion in foreign exchange reserves. In the event of a war with Pakistan or China, the West could freeze these reserves. As the ancient Indian strategist Chanakya said over 2,300 years ago, “One whose knowledge is confined to books and whose wealth is in the possession of others can use neither knowledge nor wealth when the need for them arises.”
In the context of Western nations freezing the assets of countries like Russia, Libya, Iraq and Iran, the Indian economy may face increasing pressure, given the country’s growing economic importance and geopolitical significance.
In recent weeks, US President Donald Trump has escalated trade tensions by threatening India with economic sanctions, including a 26 percent tariff on Indian exports and potential 100 percent tariffs if India continues importing Russian oil. By targeting BRICS nations, Trump aims to curb trade with Russia and protect the US dollar’s dominance. These measures could disrupt India’s economy, particularly its oil imports and key export sectors like IT and pharmaceuticals. India is navigating delicate trade talks to avoid penalties while maintaining strategic ties with both the US and Russia.
Wealthy Indians may also face sanctions. For a high net worth individual, keeping money in tax havens or secrecy jurisdictions may be a really bad idea. The problem is there’s no guarantee that the hounds at the OFAC won’t sniff out your holdings. Plus, there’s the very real possibility that Western governments could collaborate with each other during crises and conflicts. For instance, OFAC could share information about wealth kept in the Cayman Islands with the UK; similarly information about funds invested in the Isle of Man will be passed on to the US government by British intelligence.
Here are some strategies India – and any other sovereign country – could adopt to safeguard its financial systems:
Diversifying Foreign Reserves
First up, stop investing trade surpluses in US and European treasury bonds. These bonds are often considered the safest of all investments. But in fact, they are neither safe nor lucrative. They just seem so because few investors know what really happens to their money.
Take US treasury bonds. With bond yields far below actual consumer price inflation, the US literally exports its inflation overseas, causing massive losses to bond holders. So not only do foreign governments get trapped in “sucker” investments and get locked in (usually 20 years for the ‘best’ yields) but they risk everything if the US freezes their holdings.
India can diversify its foreign reserves away from Western currencies (like the US dollar and the euro) to minimise exposure to sanctions or asset freezes. By holding more assets in gold, other stable currencies (such as the Swiss Franc) or even in cryptocurrencies with robust security, India could reduce its reliance on Western-dominated financial systems.
Perhaps the New Development Bank, a multilateral development bank established by the BRICS (Brazil, Russia, India, China, and South Africa) could offer long and short-term bonds where smaller countries can park some of their wealth.
Strengthening Multilateral Relations
India can strengthen financial and trade relationships with countries that are not part of Western sanctions regimes, such as Russia, China, and other nations in Africa, Asia, and Latin America. This would help create alternative payment and trade systems that are less reliant on the US dollar or Western banking institutions.
Promoting Use of Local Currencies
India has already begun discussions with various countries, including Russia and Iran, to settle trade in local currencies rather than relying on the US dollar. This shift would help shield India from sanctions and asset freezes, as transactions would not pass through Western financial institutions.
Strengthening Financial Infrastructure
Invest in alternative financial systems and institutions. For example, India’s RuPay payment system and the National Payments Corporation of India (NPCI) could be expanded and made interoperable with countries outside the Western-dominated financial networks. Developing independent systems for SWIFT-like messaging services could also reduce vulnerability.
Improving Domestic Financial Resilience
Ensuring strong financial institutions and a robust domestic economy can mitigate external shocks. India must focus on maintaining a healthy foreign exchange reserve buffer, managing its fiscal deficit prudently, and diversifying its investments into less volatile assets.
Engaging with Non-Western Institutions
India could engage more actively with institutions like the Asian Infrastructure Investment Bank, or even the Shanghai Cooperation Organization, which are less likely to be influenced by Western sanctions. These institutions can offer alternative financing for projects, reducing dependency on Western-dominated financial systems.
Enhanced Use of Digital Assets
With the rise of blockchain technology and cryptocurrencies, India could explore the potential for digital currencies or blockchain-based systems for international transactions. Digital currency initiatives like the Digital Rupee could offer an alternative route for financial exchanges outside the traditional global financial network.
Adopting Strategic Resilience in Key Sectors
Focus on strategic self-sufficiency in critical sectors such as energy, defense, and technology. For example, in energy, increasing investments in renewable energy can reduce dependence on oil and gas imports, thus buffering the impact of potential sanctions or supply disruptions.
Building a Strong Economic and Political Diplomacy Framework
India must maintain strong diplomatic ties with both Western and non-Western powers, ensuring that it remains an important global player. By acting as a bridge between different power blocs, India can leverage its geopolitical position to protect its financial interests while reducing the likelihood of being caught in sanctions regimes.
Expanding Alternative Payment Systems
Integrate further into alternative payment systems like China’s CIPS (Cross-Border Interbank Payment System), which provides an alternative to the Western SWIFT system. As India and China grow closer economically, this integration could reduce India’s reliance on the US-led financial infrastructure.
Conclusion
After four centuries of colonialism, the philosophy of loot-and-scoot seems to be ingrained among some Western elites. With very little of the mechanism of this loot – the word comes very appropriately from India which the British plundered for over two centuries – known to the Western public, there is not much pressure on Washington and London to mend their ways.
