How Russia Could Respond to West's Potential Frozen Asset Seizure

Moscow has repeatedly warned that any attempt to confiscate its frozen assets constitutes an expropriation of property and violates international law.

A group of international law experts and practitioners from Belgium, France, Germany, Japan, the Netherlands, the UK, and the US are seeking to bolster the legal case for seizing frozen Russian Central Bank assets, Bloomberg news agency has reported.

In a letter obtained by Bloomberg, the experts argue that such actions are allegedly allowed under international law, citing the ongoing Ukraine conflict as a pretext. The letter, however, did not elaborate on what legal mechanism (if any) these experts could use for possible a seizure.

Shortly after the start of Russia's special military operation, Western countries slapped comprehensive sanctions on Russia, including the freezing of about €260 billion ($280 billion) in securities and cash, with more than two-thirds of the sum immobilized in the EU.

"I do not think that it is possible on legal grounds to confiscate frozen assets of the Russian Central Bank, even though these assets are held in some Western countries such as the US, the UK, Germany or France," Sergio Rossi, professor of macroeconomics and monetary economics at the University of Fribourg, Switzerland, told Sputnik.

Touching upon potential ramifications, he suggested that speculation about the possibility of confiscating the assets on a legal basis "could induce a number of European or US stakeholders to seize these assets held in their own countries in order to give them to Ukraine, so as to reduce the expenditures of their own governments in support of Ukraine."

This may, in turn, "give rise to some reputational risks at international level, since these countries might be considered less trustworthy in managing foreign financial capital, which is thereby subject to confiscation in a not-too-distant future, particularly in view of the existing huge geopolitical tensions, notably between China and the United States, in the Middle East or in the Red Sea," according to Rossi.

When asked what countermeasures one should expect from Moscow if the US and the EU take action in this regard, the pundit suggested that the Russian government could sell "a relevant share of its Western assets, particularly US and European bonds and equities."

Russia then "could invest this capital in a number of economic activities across the so-called ‘Global South’ countries, particularly in the BRICS+, namely, Brazil, India, China, South Africa, and some other countries whose economy is emerging in the currently multi-polar globalization," per the expert.

Similarly, he did not rule out that Russia could sell "huge amounts of US dollars across the foreign exchange market, thereby inducing a relevant depreciation of the greenback, with a negative effect on the US balance of trade, hence on US inflation and economic growth, all of which could increase unemployment, poverty and fiscal deficits in the United States."

He also indicated that others may follow the Russian move, "thereby impacting on Western economies negatively, in a period when both the US and the EU already have their own economic and social problems to address properly and for the common good," Rossi concluded.

IMF Warns Against Confiscating Frozen Russian Assets

The pundit’s comments come after the International Monetary Fund (IMF) warned that Western plans to confiscate frozen Russian assets could threaten the international monetary system and carry other unanticipated risks.

Russia has repeatedly slammed the move, with Kremlin spokesman Dmitry Peskov saying that Moscow "considers all cases related to blocking, arrest or other retention of any funds related to state property and private property, or mixed types of property of the Russian Federation abroad, to be illegal acts."

He was echoed by Russia’s Foreign Ministry spokeswoman Maria Zakharova, who denounced the EU plans as an "escalation of economic aggression," warning that Moscow would respond in a harsh manner.

Russian President Vladimir Putin, for his part, dubbed the West’s threats "unseemly business," and warned that "stealing other people’s assets has never brought anyone good."