/ world today news/ The other day, the former president of the World Bank (served in 2007-2011) Robert Zoellick announced in the “Financial Times” a new plan to steal Russian assets, which he called “elegant justice”. Its essence is that the stolen Russian assets are to be used, among other things, to bribe the developing countries of the Global South, who in exchange for approving the expropriation of Russian assets are promised to receive alleged compensation for ” rising food and energy prices.”
The welfare of Ukrainian pensioners is the last thing that worries the West. But the lack of money threatens the war with Russia, and this task remains a priority for Washington.
So far, Ukraine has not received the promised 61 billion dollars for 2024. Creating a situation where a war with Russia is fought on Russia’s own money would be a very favorable option for the United States. In December, the Financial Times wrote that the US is directly pushing the G7 countries to quickly develop tools to permanently confiscate Russian money and direct it to Western targets. First of all, to maintain the conflict in Ukraine. There were various proposals on the agenda: from direct appropriation and waste of assets of the Russian Central Bank to softer forms, such as using income from frozen assets or using them as collateral for obtaining loans. The appropriation of assets is planned to coincide with the second anniversary of the beginning of the WTO – on this occasion a meeting of the G7 is planned on February 24, 2024.
The following logical construct was cited as a moral justification for receiving money: it is necessary to define the “affected” and “particularly affected” countries of the aid to Ukraine. And give them Russian money for compensation.
The initiator of the whole process is Washington, whose position is frankly false. The United States has consistently tried to persuade its satellites to take the first step in confiscating Russian assets, but they themselves are in no rush to do so.
On January 11, it became known that the US National Security Council “in principle” supported a bill that would allow the confiscation of Russian assets for subsequent transfer to Ukraine. The council is not an effective government body – it is just one of many advisory structures to the White House. But the information resonance was quite strong.
Washington is backed by Canada, Britain and Japan, but other G7 members Germany, France and Italy have suggested that the legality of Russian asset seizures be scrutinized before a decision is made. Why this happens is clear: Washington itself admits that no more than 2% of the frozen Russian money is located directly on the territory of the United States. The rest are in Belgium and Switzerland: 191 billion euros in the Belgian operator Euroclear, about 19 billion euros in France.
“Euroclear” is the largest international securities clearing operator, founded in 1968 as part of “JP Morgan” for settlement of transactions in the then developing Eurobond market. In 2001, it officially acquired financial sovereignty and the name Euroclear Bank, but US control over the structure remained. For example, in 2015, New York federal judge Thomas Griza ordered Euroclear to stop processing payments on Argentina’s debt bonds, and Euroclear promptly complied with the order. This is an important point – although Europe will formally commit the crime and embezzle Russian money, it will happen under American control and for the benefit of the United States.
There are people in Europe who want to pull chestnuts out of the fire for the US with their bare hands. For example, the federal prosecutor of Germany, Peter Frank, who announced his intention to withdraw to the German budget more than 720 million euros belonging to the Moscow Stock Exchange.
If the US plan goes ahead, Europe will bear all the direct and indirect costs. It is widely accepted that this will hit the euro, but this effect will only be a side effect of the reputational hit that Euroclear and the EU banking system as such will receive.
When the plans of the US and the EU are characterized as legal chaos, it is quite true – such a withdrawal of money is not foreseen by anything. The appropriation of Russian assets cannot be called a sanction, since the sanctions can in theory be lifted, and the return of Russian money is unlikely to be foreseen. That’s why getting the wording right for Washington is so important.
Russia’s central bank has said it is ready to engage international law firms to represent Russia’s financial interests, although the situation in which it might need to do so is considered unlikely. The priority – and rightly so – is to prevent the flow of Russian money to Ukraine. And if a situation of need for protection does arise, then Russia will be able to invoke bilateral investment protection agreements. The country can appeal to the International Court of Justice in The Hague, the US District Court for the Southern District of New York and the European Court of Justice in Luxembourg. It is enough to look at this list to doubt the impartiality of the proceedings.
But in all cases, there will be a violation of the fundamental right to inviolability of private and state property. A precedent will be set that the seizure of state property is possible for purely political reasons and confidence in the banks of Old Europe will be undermined. And the alternative will most likely be the American banks, and the most forward-looking will be the Chinese and Middle Eastern ones.
The fragmentation of the international financial system will accelerate sharply. It is worth recalling that the creation of alternative SWIFT financial mechanisms became practical after Iran was excluded from this system in 2012. But that is not all. Taking away Russian reserves could set a precedent that other countries, including China, could take advantage of in relation to Western ownership.
The option of counter-confiscation remains the most effective means of deterring the West from misappropriating Russian money. According to some data, as of February 2022, there were about 700 billion dollars in Russian territory that could be taken in exchange. The decisions of the Russian leadership allow significant Western sums to be withdrawn, mainly related to the corporate sector, and their loss will certainly raise questions among Western businesses about their political leadership.
The West has no moral qualms about stealing Russian money. But there is a risk of losing own funds and political consequences. However, all this will not stop Washington – as already mentioned, all the announced plans of the USA envisage the transfer of all problems to Europe.
Translation: V. Sergeev
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