Sat, Mar 21, 2015

Russian President Vladimir Putin has urged Russian business leaders to bring money held abroad back to Russia sooner rather than later, warning that international sanctions could see foreign assets frozen.

'I would like to repeat that the situation is such that alarming information is coming from some countries and we are getting the impression that attempts may be made to prevent the return of capital to Russia,' Putin told the business community at the Russian Union of Industrialists and Entrepreneurs congress in Moscow on Thursday, according to a transcript of the speech published on the Kremlin's website.

Russia has been sanctioned by both Europe and the U.S. for its part in the conflict in eastern Ukraine, where violence flared up a year ago, and for its annexation of the Crimea region. The sanctions are due to expire in July but could be extended, according to European leaders who met to discuss the matter on Thursday.

Seeming to allude to the prospect of further sanctions, Putin said those could see 'limits on the use of the capital that is now in foreign jurisdictions.'

'Simply bear this in mind,' he told the gathering.

'Of course, each one of you has to make this decision for yourself,' he said, later adding: 'However, the danger of transfers, including into Russian jurisdiction, being blocked does exist.'

Putin's speech was followed by a private meeting with several top oligarchs, at which he reemphasized that funds should be brought to Russia promptly, billionaire Oleg Deripaska told local TV, according to AP news agency.

'The president said that businessmen who have taken the decision to return money to Russia should not delay. That was his main message,' Deripaska said.

Capital flight from Russia in 2014 totalled $151.5 billion, their highest level on record, central bank data showed in January, highlighting the impact that sanctions has had on investor confidence. 

Russia is keen to see money return to the country, whose economy has been hit by lower oil prices and revenues, as well as the sanctions that have been applied against Russia's businesses, financial sector and prominent individuals, scaring off foreign investors.

To try to coax money back to the country, Putin proposed a capital amnesty in December 2014 in which assets returned to Russia would not be taxed or questioned by law enforcement agencies.

On Thursday, he reiterated the offer and rebuffed concerns that it could volate international laws on combatting money laundering.

'Nobody should ever doubt that everything happening in Russia is in full compliance with international law and international practice, including the inadmissibility of laundering illegally acquired capital,' he said.

Putin's remarks came as European leaders at a summit in Brussels on Thursday agreed to link the cessation of sanctions to the implementation of a ceasefire agreement struck between Ukraine and Russia last month. That could mean that sanctions currently due to expire in July are extended until the end of the year when, as per the ceasefire agreement, Ukraine is expected to regain control of its eastern border from pro-Russian rebels. 

Extending sanctions would prolong Russia's economic and political isolation, with European Union leaders unconvinced about its commitment to uphold the Ukraine ceasefire and concerned about its defiance about the annexation of Crimea.

On Thursday, Putin said Moscow was ready to support Russian businesses with an 'economic stabilization plan' and an 'anti-crisis fund' worth 234 billion rubles ($3.8 billion).

'It is only through a partnership between the state and businesses that we can overcome the unfavorable economic situation mentioned here and achieve stable growth,' Putin said.