Russia Hits Back with Multi-billion Penalty on Austrian Bank

The logo of Raiffeisen Bank International (RBI) is seen at its headquarters in Vienna, Austria, March 14, 2023. REUTERS/Leonhard Foeger/File
The logo of Raiffeisen Bank International (RBI) is seen at its headquarters in Vienna, Austria, March 14, 2023. REUTERS/Leonhard Foeger/File
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Russia Hits Back with Multi-billion Penalty on Austrian Bank

The logo of Raiffeisen Bank International (RBI) is seen at its headquarters in Vienna, Austria, March 14, 2023. REUTERS/Leonhard Foeger/File
The logo of Raiffeisen Bank International (RBI) is seen at its headquarters in Vienna, Austria, March 14, 2023. REUTERS/Leonhard Foeger/File

A Russian court's order for Austria's Raiffeisen Bank International to pay 2 billion euros ($2.1 billion) in damages for a collapsed deal shows Moscow's determination to strike back at the West, with companies bearing the brunt of the fallout.

Monday's ruling, delivered to a courtroom where armed men in balaclavas sat among those involved in the case, is a blow to the biggest Western bank in Russia, which has made billions of profits there during nearly three years of conflict with Ukraine.

It marks a watershed for the bank that has provided a payments bridge for Russia's middle class and companies into the West, requiring Raiffeisen to set aside a substantial amount for the loss even as it seeks to challenge the ruling, Reuters reported.

The judgement, made as Donald Trump was being sworn in as US president, serves as a warning to others, and prompted accusations by Raiffeisen's lawyer that the court was biased and that the masked men were there to intimidate.

The Russian lawyers taking the action against Raiffeisen said the men in the courtroom were bailiffs there to ensure order, accusing their opponents of "bombarding the court with unfounded petitions".

The penalty, issued by a court in the Russian exclave of Kaliningrad, follows the collapse of a deal involving Raiffeisen to release a Russian-owned stake in an Austrian builder, which unravelled under pressure from Washington. Now Raiffeisen has been lumbered with the bill.

"This is a final warning to all Western companies that you cannot do business with Putin's Russia," said Helmut Brandstaetter, a liberal Austrian lawmaker in the European Parliament.

The move also coincides with a deterioration in relations between Russia and Austria, long close to Moscow but which has gradually been unwinding its ties, abandoning a multibillion-dollar deal in recent weeks to buy Russian gas.

"Raiffeisen was long enough warned to pull out," said Brandstaetter. "It also shows that any continued bond between Austria and Russia will lead to disaster."

INEVITABLE RETALIATION

The ruling adds to worries for Western firms still operating in Russia, which include the likes of food companies PepsiCo , Procter & Gamble and Mondelez, and Italian bank UniCredit.

Ian Massey of risk consultancy S-RM said it was part of "pressure tactics, including increasingly punitive exit terms, asset seizures, and now ... huge fines."

"In the context of Russia's increasing diplomatic and economic isolation, retaliation against Western corporate symbols was nigh-on inevitable."

Monday's decision sees Russia follow through on previous threats to target privately-owned assets.

Last May, Moscow said it would identify US property that could be used for compensation over losses from the seizure of frozen Russian assets in the United States.

Moscow has already seized some assets and forced through sales to hand-picked buyers, as was the case for French yoghurt maker Danone and Danish brewer Carlsberg.

The Kremlin controls which companies are allowed to sell up and demands a heavy discount on the sale price.

Almost three years after Russia sent troops into Ukraine, Raiffeisen's continued presence in Russia underlines the lingering ties between Moscow and Vienna - with Vienna having served as a hub for cash from Russia and former Soviet states.

That bond put Raiffeisen and Austria on the front line of a global push by the United States to isolate Russia.

The court dispute followed the failure of a deal that Raiffeisen hoped would allow it to unlock some of its frozen billions in Russia.

The case was centred on a claim by Russian investment company Rasperia against builder Strabag, its Austrian shareholders and the Russian arm of Raiffeisen.

Raiffeisen had sought to buy a stake in Vienna-based Strabag from Rasperia, which Strabag had linked to Russian tycoon Oleg Deripaska.

Washington identified Rasperia as part of a group of Russian companies still controlled by Deripaska, when it imposed sanctions on some of those involved, scuppering the deal.

A spokesperson for Deripaska reiterated that he had no links with the company at the heart of the dispute with Raiffeisen.

Raiffeisen has around 6 billion euros in Russia, earned from international payments and from billions of euros of Russian deposits, a person with knowledge of the matter has told Reuters.



Grossi Urges Iran to Reach an Understanding with Trump

21 January 2025, Switzerland, Davos: Director General of the International Atomic Energy Agency (IAEA) Rafael Grossi speaks at "Road to Tripling Nuclear Capacity session" during the World Economic Forum Annual Meeting. (Valeriano Di Domenico/World Economic Forum/dpa)
21 January 2025, Switzerland, Davos: Director General of the International Atomic Energy Agency (IAEA) Rafael Grossi speaks at "Road to Tripling Nuclear Capacity session" during the World Economic Forum Annual Meeting. (Valeriano Di Domenico/World Economic Forum/dpa)
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Grossi Urges Iran to Reach an Understanding with Trump

21 January 2025, Switzerland, Davos: Director General of the International Atomic Energy Agency (IAEA) Rafael Grossi speaks at "Road to Tripling Nuclear Capacity session" during the World Economic Forum Annual Meeting. (Valeriano Di Domenico/World Economic Forum/dpa)
21 January 2025, Switzerland, Davos: Director General of the International Atomic Energy Agency (IAEA) Rafael Grossi speaks at "Road to Tripling Nuclear Capacity session" during the World Economic Forum Annual Meeting. (Valeriano Di Domenico/World Economic Forum/dpa)

The head of the International Atomic Energy Agency (IAEA) urged on Tuesday Iran to reach an understanding over its atomic activity with the administration of US President Donald Trump in order to avoid being dragged into another military conflict in the Middle East.

UN nuclear watchdog chief Rafael Grossi said that Iran has accelerated its enrichment of uranium to up to 60% purity, close to the roughly 90% level that is weapons grade.

He spoke about Trump’s decision six-and-a-half years ago to quit the 2015 nuclear deal that gave Tehran sanctions relief in exchange for strict limits on its nuclear activities.

“There was an agreement that existed before President Trump decided that was not the path he wanted to follow,” Grossi said at the World Economic Forum in Davos. “Now we need to come to terms with how we deal with this, excluding of course, a war. We don’t want more wars.”

He confirmed Iran continues to produce large quantities of highly-enriched uranium. In December, Tehran’s engineers increased capacity sevenfold, to about 34 kilograms a month in response to a diplomatic censure in November.

Iran ready for more talks

Meanwhile, Iran threw the ball into the West’s court, declaring its readiness to revive negotiations on its advanced nuclear program.

Deputy Foreign Minister Kazem Gharibabadi said on Tuesday his country wants to pursue discussions with European nations (France, Germany and the UK) after both sides held a third round of talks in Geneva last week.

“We agreed to continue discussions. We will determine the date and time for them through joint consultations,” he said.

Both Iran and the so-called E3 countries had described previous talks as “frank and constructive.” Iran said the third round, which started last September in New York, aimed at exploring how Tehran can return to the negotiations table.

Gharibabadi said: “The most logical path forward is to initiate talks on lifting sanctions.”

Speaking to reporters, he reiterated Iran's willingness to engage in diplomacy. The country, as always, is ready to initiate and resume negotiations aimed at lifting sanctions, he said.

“We have consistently been prepared, and if the other parties demonstrate the same readiness, we are confident that talks can proceed and yield positive results,” he said, according to the state-owned Iranian Students' News Agency (ISNA).

He underscored the peaceful nature of Iran’s nuclear program, adding that “there are proper opportunities for dialogue and understanding” and noting that “unilateral sanctions were ineffective.”

Both US and Iranian officials have sent mixed signals about whether they were headed to a confrontation or explore diplomatic solutions now that Trump has assumed office.

Maximum pressure

Tehran fears that Trump will return to his previous “maximum pressure” policy that he had applied on Iran during his first term in office. It also fears Britain, France and Germany could trigger the so-called “snapback mechanism,” part of the 2015 deal, which allows signatories to reimpose UN sanctions on Iran in cases of the “significant non-performance” of commitments.

The option to trigger the mechanism expires in October this year, adding urgency to the ongoing diplomatic efforts.

Last Friday, reports said Iranian officials had informed their European counterparts that Tehran would withdraw from the Nuclear Non-Proliferation Treaty if the snapback mechanism is implemented.

Last week, Bloomberg reported that Trump could blow a $30 billion hole in Iran’s economy should he return reimpose his maximum pressure policy.

It said the president’s key advisers are looking at a big sanctions package that hits major players in Iran’s oil industry, which could come as early as February.

On Sunday, Trump’s national security adviser, Mike Waltz, said in an interview that the administration will make key decisions concerning Iran over the next month.

He said the Israeli strikes against Hamas and Hezbollah, in addition to the fall of Bashar al-Assad's regime in Syria, have all prepared the circumstances for the US to soon take strategic decisions.