Saudi Arabia and Indonesia have reportedly been raising concerns over their own reserves held in the West
The confiscation of frozen Russian assets could set a dangerous precedent in international law, Indonesia and Saudi Arabia warned the EU at a recent meeting of G20 finance ministers, the Financial Times reported on Friday.
The US and its allies have blocked around $300 billion in Russian central bank assets as part of sanctions imposed on Moscow over the Ukraine conflict. Most of the funds are held in the EU and, while Washington has insisted that international law allows for the appropriation of the funds, some EU members, including Germany and France, have been reluctant to take that step.
Concerns were raised again during the recent G20 finance ministers’ meeting in Brazil, the FT reported, citing EU officials. Saudi Arabia’s Minister of Finance Mohammed al-Jadaan and his Indonesian counterpart Sri Mulyani Indrawati, were reportedly among those particularly alarmed by the potential seizure of Russian funds.
Both nations are “very worried” about the future of their own reserves held within the West, an unnamed European official told the outlet, adding that the main concern was whether their money was “still safe” there.
While the US has been pressing its allies to seek ways of tapping into frozen Russian reserves, opponents claim that such a move risks setting a dangerous precedent in international law, with far-reaching implications.
According to FT, Japan, France, Germany, and Italy remain “highly cautious” on the issue, leading to a stalemate. The outlet noted that some of the most prominent skeptics are G7 central bankers like European Central Bank president Christine Lagarde, who has previously warned that taking the step from freezing assets to confiscating them could risk “breaking the international order that you want to protect.”
The Times also cited academics who said that any plan to use these assets would test the legal principle of state immunity, whereby no country can be sued by the courts of another if they do not agree it has jurisdiction over it.
“Our international legal system doesn’t have a police force ... it really does rest on fundamental respect for international law,” said Philippa Webb of King’s College London, who has authored a European parliament study on the legality of confiscating Russia’s assets.
“The risk is that if we just start ignoring these principles, they can equally be used against us by other states and that we set a precedent that can have unintended effects down the line,” she explained.
The European officials who spoke to FT said it was easier for the US to adopt a hardline stance because with Washington only holding around $5 billion in Russian state assets, they have “little skin in the game” compared to Europe.
In April, US President Joe Biden signed a bill permitting the seizure of Russian assets that are sitting in American banks.
Moscow has repeatedly stated that confiscation of its frozen assets would undermine the trust of international investors in the Western financial system, which would be very difficult to restore.
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