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18 Feb, 2024 13:40

Russian asset seizure would boomerang – US senator

Rand Paul says the move would make peace in Ukraine less likely while undermining America’s global standing
Russian asset seizure would boomerang – US senator

US Senator Rand Paul has warned against seizing frozen Russian assets, saying it would have negative consequences for America, as well as Ukraine. The Republican added that by confiscating the funds, Washington would demonstrate to the world that it flouts international law whenever it suits its agenda.

The US and EU have blocked an estimated $300 billion in assets belonging to the Russian central bank since the start of the Ukraine conflict in February 2022. While the US has advocated for seizing the frozen assets and handing them over to Ukraine, a number of EU states, including Germany, France, and Italy, have argued that sovereign assets have immunity under international law. The European Central Bank has also cautioned that the move could undermine the euro.

In an opinion piece for the think tank Responsible Statecraft published on Thursday, Paul said that “confiscating Russia’s sovereign assets is an act of economic war.” He added that if the Senate passes the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act (REPO), this would “only reinforce the view of hardliners in Moscow.”

According to the senator, this scenario would destroy any remaining hope that relations between Washington and Moscow could be stabilized or improved. For Kiev, Paul claimed, the seizure of Russian assets would mean annihilation as the Kremlin would become convinced that “there is no negotiated settlement to be had with Ukraine.”

However, by keeping the assets intact, Washington would be able to use them as a “bargaining chip during negotiations,” the Republican lawmaker said.

Also, the confiscation of Russia’s sovereign funds would likely erode global trust in the dollar, with other nations moving their reserves to other currencies, Paul noted.

In an interview with the Financial Times published on Thursday, Lieve Mostrey, the CEO of Brussels-based clearinghouse Euroclear, warned against a plan proposed by Belgium to the G7 which calls for the use of frozen Russian assets as a backstop to issue loans for the reconstruction of Ukraine. She argued that “using assets that don’t belong to you as collateral is pretty close to an indirect seizing.”

Speaking on Tuesday, Russian Foreign Ministry spokeswoman Maria Zakharova warned that Moscow would consider Western states to be “thieves” should they seize its sovereign funds. “Our response would be extremely harsh,” the diplomat added.

Her comments came after the European Council took steps for the potential seizure of interest earned on Moscow’s frozen sovereign funds.