Such action could undermine trust in the international economic system
The potential confiscation of Russian assets abroad could lead to the collapse of the international system of political economy, Financial Times reported on Tuesday, citing analysts.
An outright seizure of Moscow’s wealth would be viewed as crossing a political Rubicon, according to Simon Hinrichsen, a visiting fellow at the London School of Economics, as quoted by the media.
“It would essentially be an action that does away with the international political economy system we have set up over [recent] decades,” the economist said.
Earlier in the day, German Finance Minister Christian Lindner told the business daily Handelsblatt that he was open to the idea of seizing Russian state assets to finance the reconstruction of Ukraine. Linder also called for assessing the legal possibilities for seizing the foreign assets of the Russian Central Bank.
While the idea of seizing the assets was “seductive,” it was also “unnecessary and unwise,” Nicolas Veron and Joshua Kirschenbaum said in a blog post published on Monday by the Bruegel think tank.
“Credibly standing for a rules-based order is worth more than the billions that would be gained from appropriating Russia’s money,” the authors said.
“Countries place their reserves in other countries trusting they will not be expropriated in situations short of being at war with each other.”
Last month, US President Joe Biden asked Congress to grant him the authority to seize the assets of wealthy individuals believed to have links to the Kremlin and use them to help Ukraine.
Earlier this week, the Ukrainian authorities adopted legislation allowing confiscation of property of those who support Russia. The new law expands the scope of the previous rules that allowed Kiev to seize assets belonging to Russian citizens, persons with close ties to Russia and companies that operate in Ukraine and in which Russia is the beneficiary.
