Russia may break diplomatic relations with the United States if Washington seizes Russian assets frozen because of the conflict in Ukraine, Russian Deputy Foreign Minister Sergei Ryabkov told the Interfax news agency today, Reuters reported.
The US “should not act under the illusion… that Russia has clung to diplomatic relations with this country with both hands,” Ryabkov said.
Western countries are actively exploring ways to seize the assets of the Russian central bank to finance Ukraine, as political disputes in the US and Europe threaten the flow of financial support to it, he wrote days ago “Financial Times“.
In recent weeks, G-7 representatives have stepped up talks about spending some of the frozen Russian state assets in the amount of about 300 billion dollars – a radical step that would open a new chapter in the West’s financial war against Moscow.
The push comes as two major aid packages for Ukraine, worth more than $100 billion, failed as Republicans in the US Congress and Prime Minister Viktor Orban of EU member Hungary spoke out against funding Kiev.
The seizure of Russian assets could provide an alternative funding stream for Kiev, especially given the expected huge costs of post-war reconstruction.
So far, however, G7 governments have refrained from such a move, fearing that some foreign investors in dollar and euro assets would pull out.
Although Washington has never publicly supported confiscation, the US has taken a more assertive stance in recent weeks, telling G7 committees that there is a way to seize the assets “in accordance with international law”.
“Members of the G7 and other specifically affected countries could seize Russian state assets as a countermeasure to get Russia to end its aggression,” said a US government discussion paper seen by the Financial Times. and which was circulated in the G-7 committees. The US Treasury declined to comment.
A U.S. official said Washington is engaged in active talks about using Russian state assets and believes there is a short timeframe for a decision. They suggested it could be discussed at a possible meeting of G7 leaders to coincide with the second anniversary in February of Russia’s invasion of Ukraine.
So far, the EU’s proposals have not led to the seizure of Russian assets themselves, but have instead aimed to reduce the profits generated for financial institutions such as Euroclear, which holds €191bn worth of sovereign assets.
But calls to divest the assets themselves grew louder as cracks emerged in the political consensus over additional funding for Ukraine. Aid packages worth $60 billion and €50 billion in Washington and Brussels, respectively, failed to win approval this week.
The US official said the legal discussions at the G7 reflected the importance of upholding international law in response to the Russian invasion.
European countries, particularly Germany, France and Belgium, have been reluctant to take such a step, citing legal considerations such as the protection enjoyed by sovereign assets under international law. Most of Russia’s 300 billion euro state assets are held in Europe.
However, one Western official said there were “definitely live talks” within the G7 and that there was a “growing consensus” in favor of using Russian state assets for Ukraine.
“We return to the question: should only Western citizens and treasuries pay for the war, or should the Kremlin participate as well?.
The US document argued that Russia’s invasion of Ukraine meant that asset confiscation could be “pursued as a lawful countermeasure by those states that have suffered as particularly affected by Russia’s violation of international law”.
Hundreds of billions of dollars worth of Russian state assets were frozen in the West, as were the fortunes of Russian businessmen and investors.
2023-12-22 08:53:02
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