Washington: Bloomberg said on Tuesday that earlier this year, Saudi Arabia said it would sell off a portion of its debt held in Europe in the event that the G7 countries moved forward with taking about $300 billion in assets that Russia had blocked.
According to those with knowledge of the situation who spoke with several of the G7 countries, Saudi Arabia’s finance ministry opposed the planned expropriation, which is meant to help Ukraine.
The study emphasized Saudi Arabia’s possible impact over European policies by pointing out the kingdom’s sizeable holdings in French and Euro bonds, which are estimated to be worth tens of billions of euros. It did stress, though, that while Saudi Arabia’s holdings by themselves might not be enough to change European policy, other nations following Riyadh’s example might cause things to change.
Although a Saudi official said that they had informed G7 members about the possible consequences of asset seizures, they also noted that the government’s threats were rare. According to a different source that Bloomberg cited, Saudi Arabia’s stance softened a little when the G7 countries approved a plan that avoided taking the assets directly into their hands.
The study, which examined the possible ramifications of Saudi Arabia’s position, emphasized that although the kingdom does not own enough European bonds to cause instability in the securities market, European officials voiced apprehensions about a potential “domino effect” in the event that other countries were motivated to sell their holdings in retaliation for Riyadh. Though speculative, such a scenario might make Europe’s economic problems worse, which are already made worse by sanctions on Russia.
In reaction to these events, European authorities have chosen to extract just accumulated interest rather than seize the principle amounts of Russia’s frozen assets, in defiance of pressure from the US and the UK. Therefore, rather than receiving immediate financial disbursements from these assets, Ukraine is anticipated to receive promises.
According to reports from European media outlets, seeking to seize all $300 billion of Russia’s frozen state assets would be “nearly impossible” due to the logistical and legal difficulties involved. At the recent G7 summit in Italy, leaders of the European Union came to a compromise in light of this fact.
As a result of this agreement, Ukraine will get a $50 billion loan that will be backed by interest from the assets that have been frozen. This strategy seeks to navigate the legal and geopolitical obstacles surrounding the asset freeze issue while offering Ukraine real financial support.
In order to strengthen support for Ukraine, the United States, United Kingdom, Canada, and other allies urge the entire seizure of Russia’s frozen assets; but, some European officials are cautious, citing concerns over creating a contentious legal precedent.
These authorities are concerned about possible fallout, such as lawsuits from Russia claiming violations of international law.
