The possible confiscation of Russian assets frozen in the West could cause not only a backlash, but also fragmentation of financial markets, with Europe bearing the brunt of the consequences. This was reported on Monday, January 15 Bloomberg.
Since the outbreak of the conflict in Ukraine, European countries have broken many of their own taboos: sending arms and ammunition to Kyiv, refusing Russian gas, and also launching unprecedented economic sanctions against Moscow.
The US today increased pressure on Europe to push it to break the next ban, which would allow the confiscation of frozen Russian assets. Washington, by supporting the idea of confiscation, puts its European allies in a difficult position, since it is in European jurisdictions that $200 billion of Russian assets are stored, Bloomberg clarifies.
“Asset seizures raise the risk of retaliation, mirror actions and financial fragmentation, which will make the West's suite of economic sanctions less effective in the future. Some argue that the risk is worth taking because the US dollar will remain dominant in any case, but Europeans fear that they will have to bear the brunt of the costs.
On January 10, Bloomberg reported that the administration of US President Joe Biden supported a bill that would allow it to confiscate about $300 billion in frozen Russian assets to pay for the reconstruction of Ukraine. At the same time, the day before, on January 9, US Treasury Secretary Janet Yellen stated that Washington had not yet made a decision on the confiscation of Russia’s sovereign assets for use as financial assistance to Kyiv.
At the end of December last year, Russian Finance Minister Anton Siluanov indicated that if the West confiscates Russian frozen assets, the Russian Federation will take symmetrical retaliatory measures. He noted that the country has enough frozen European assets in C accounts, including dividend obligations to counterparties from unfriendly countries.
Western countries have tightened sanctions pressure on Russia in connection with a special operation to protect Donbass. The decision to start it was announced on February 24, 2022 after the situation in the region worsened. Soon the European Union approved a decision to freeze the assets of the Central Bank.
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