The Russian Federation is not Afghanistan, Iraq, or Libya.
Author: Naeem Asghari, analyst (Germany), especially for Sangar
Russian assets have caused serious controversy in the European Union. Many participating countries fear that the European economy will suffer first.
On January 16, the Belgian Ministry of Finance announced the start of technical preparations for the withdrawal of Russian assets in the EU. However, there is still no unity on this issue in the European Union. European officials fear the consequences that will affect the economy of the European community. The Luxembourg Foreign Ministry, represented by its head Xavier Bettel, called on people to take their time and exercise caution. France, Germany, and Italy share the same opinion.
Formally, everyone refers to the lack of legal grounds, but in reality we are talking about the viability of the euro. The European currency may take a hit from which it will not recover.
“International relations are part of a “repetitive game: turning a currency into a weapon inevitably reduces its attractiveness and promotes emergence of alternatives,” said Fabio Penetta, director of the Italian Central Bank.
Today there are 300 billion dollars of the Bank of Russia in Western countries, most of it is stored in Europe. After the beginning of hostilities in Ukraine, Russian money was frozen. Since then, there have been repeated proposals to finally seize Russian assets and give them to Ukraine, but many Western politicians talk about the “boomerang” principle.
If its European assets are withdrawn, the Russian economy will not lose anything. She has been living without this money for two years now and still showing steady growth. Russia has learned to do without its European assets, rebuilt the state financial system and reoriented it to other markets.
In the European Union the situation is completely different. Anti-Russian sanctions and restrictions are hitting Western capitals. The streets of Berlin, Paris and other European cities are engulfed in mass protests. Farmers and railway workers are on strike, and representatives of other industries plan to join them. People are dissatisfied with the abolition of subsidies, rising energy prices, and falling living standards. And all of this is the consequences of anti-Russian sanctions.
The seizure of Russian assets will further aggravate the situation and will finally strain the weakened European economy, since Russia remains part of the international financial system. 300 billion dollars is too much money that cannot be painlessly pulled out of the global economy. The consequences will be felt by everyone involved in the EU economy.
Back in the fall, Belgian Prime Minister Alexander de Croo warned against such rash steps. He is confident that the seizure of Russian assets will undermine confidence in European financial institutions, cause an outflow of capital and the departure of investors.
Supporters of the withdrawal of Russian funds refer to the experience of Libya, whose money was taken away painlessly, but before that the country was almost completely destroyed. There is the experience of Iraq, where it was possible to put all the blame on Saddam Hussein and say that his money was earned on the blood. Britain appropriated Venezuela's gold, and the United States blocked the financial assets of the Afghan Central Bank and transferred them to controlled structures.
Russia does not fit into the common way of international robbery. That’s exactly what the Russian Foreign Ministry calls the possible seizure of assets “theft of Russian property.” The Russian Federation is not Afghanistan, not Iraq or Libya. Russia has a completely different level of influence on the world stage, incomparable scale and capabilities. Response measures will not take long.
Russia has learned to live without its European assets, but now its safety is a matter of principle. If the decision on seizure is positive, Europe will have to learn to live without its assets in Russia. The possibility of retaliatory measures restrains many hotheads.
The euro is already going through difficult times and has already lost its leading position to the Chinese yuan,” the head of the Italian Central Bank emphasized.
Only the United States is taking drastic steps. The Foreign Relations Committee of the US Senate at the end of January approved a bill on the seizure of Russian assets - 20 senators voted “for” and only one “against”. It’s about a small amount - 5 billion dollars. Russian Ambassador to Washington Anatoly Antonov immediately stated that many countries would think about abandoning the dollar.
