American think tanks advocate: It's time to seize Russia's frozen assets

The potential drawbacks of seizing Russia's sovereign assets are no longer as significant.

The Trump administration has taken further measures by imposing the latest sanctions on two major Russian oil companies - Rosneft and Lukoil - to impose greater costs. Europeans are likely to follow suit.

The next area where the U.S. and its allies can "impose costs" is Russia's frozen central bank assets. The debate on how to handle the $300 billion in Russian central bank assets frozen in Western banks is at a critical juncture. There is both a moral necessity and strategic urgency to make Moscow pay for its aggression, but there are also risks involved.

Most of the frozen assets are located in Europe. Although the estimated figures vary, it is conservatively estimated that about $5 billion in Russian central bank assets are frozen in the United States, while Belgium holds around $200 billion. For reference, Belgium's GDP is approximately $650 billion, so this has a much greater impact on Belgium than on the United States.

These assets are currently frozen in G7 countries and Belgium (held in the European Central Bank). As Vice President JD Vance has previously hinted, seizing these assets is one of the options that is "not impossible." These assets are currently frozen in countries such as Belgium and France, mainly held by private companies like Euroclear.

Seizing these assets faces many criticisms. First, seizing these funds could set a dangerous precedent, undermining the trust that supports the dollar, euro, and Western financial institutions as the backbone of the global economy. Treasury departments and central bank governors are concerned that seizing Russian central bank deposits in Western financial institutions could hinder foreign governments (such as other major reserve holders) from holding assets denominated in dollars or euros, or depositing assets in Western banks. The counterargument is that they have few other investment options.

Second, there are some legal obstacles to be resolved. Most of the money is held in institutions like Euroclear, which raises questions about jurisdiction and legal procedures.

Third, some argue that Russia could seize American or European assets in Russia, including corporate bank accounts, investments in state-owned enterprises, or real estate. However, according to Reuters, by 2024, Western companies had written off over $107 billion in investments in Russia. In addition, Russia itself plans to liquidate Western assets in Russia.

Despite these complex factors, political momentum within the G7 to seize Russia's sovereign assets is growing. In the U.S. Congress, the Ukraine Buyback Agreement Implementation Act received strong bipartisan support from the Senate Foreign Relations Committee on October 22 and was submitted by the House Financial Services Committee on July 22 as the Peace Act.

The discussion among G7 members on seizing Russia's sovereign assets has been ongoing for more than two years. Although the 2023 Buyback Agreement granted the president the power, the Biden administration ultimately decided not to take action to seize Russia's assets. This delay was a mistake.

But now, the Trump administration has the opportunity to take the lead on this issue and urge European allies to take greater responsibility. To succeed, the U.S. must clearly signal to its G7 allies that it is prepared to take the lead in seizing Russia's sovereign assets.

The U.S. must also emphasize that it expects all G7 member states to do so. Seven countries joined us in taking action, just as President Trump challenged Europe to join the oil sanctions. With broad alliance support, seizing assets can transform symbolic freezes into concrete penalties for Russia's provocative actions.

Seizing Russia's frozen sovereign assets by all G7 countries will be the next option on the table to pressure Russia. This step requires careful consideration to ensure that all other G7 member states follow the U.S.'s example. This step will show that aggression has a cost. If the Trump administration says, "If Europe seizes these assets, we will too," then Europe is likely to comply under pressure.

Sources: The National Interest

Author: Daniel F. Lund

Date: October 29

Original: www.toutiao.com/article/1847593602754572/

Statement: This article represents the views of the author.