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Russia’s friends beg EU to leave frozen assets alone – POLITICO

There are fears that these disputes could extend beyond Russia.

Moscow could push friendly countries like China and Saudi Arabia to target Western assets in their own countries, potentially tarnishing their reputation in the eyes of international investors.

Experts suggest that these countries’ fears that their assets in Europe could be next to be confiscated if they lose favor with the West are overblown.

“The only countries that should be worried are those planning an illegal and unprovoked invasion of their neighbor,” said Tom Keatinge, a financial crime expert at the think tank RUSI. “And I don’t think any of these countries (China, Indonesia and Saudi Arabia) are considering that.”

Nevertheless, arguments focused on financial risks are finding resonance in some European capitals. The German government and the European Central Bank have argued that the confiscation could undermine investor confidence in the EU financial system.

Any potential but unlikely disruption to markets caused by large-scale confiscation could harm countries like the Gulf states that have huge stocks of foreign currencies, Keatinge added.

If the G7 group of industrialized countries decides to seize frozen Russian assets, authorities expect Russian courts to successfully challenge the decision. A court ruling in Russia could potentially leave a black hole in the balance sheets of financial institutions holding these assets.

These organizations would have to draw on their cash reserves to compensate for losses. This could involve resorting, as a last resort, to other sovereign wealth funds deposited in their accounts.

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