G20 split over Russian assets
D ivisions
among the world’s top economic officials over how to use Russia’s central bank assets to support Ukraine spilled into public view Wednesday when Bruno LeMaire, France’s finance minister, said that seizing the frozen assets would be a violation of international law.
The comments, made on the sidelines of the gathering of finance ministers of the Group of 20 nations in Brazil, came a day after Treasury Secretary Janet Yellen said that seizing the assets was a possibility and that there was a legal justification for doing so.
Officials from the Group 7 advanced economies have been debating for months over whether they could legally seize more than $300 billion in Russian central bank assets stashed in Western nations and use those funds to aid Ukraine. Those discussions have taken on greater urgency amid waning political support in the United States and Europe to continue to provide Ukraine with economic and military support.
Yellen, who initially had reservations about the viability of freezing or seizing Russia’s assets, offered her most explicit public support to date Tuesday for the idea of unlocking “the value” of Russia’s immobilised assets.
“While we should act together and in a considered way, I believe there is a strong international law, economic and moral case for moving forward,” Yellen said.
But LeMaire, who spoke just a few hours before a private meeting with Yellen, pushed back on that assertion.
“We don’t have the legal basis to seize the Russian assets, and we should never act if we don’t obey by the international law and by the rule of law,” Le Maire said, according to a record of his remarks.
GROWING MOMENTUM
Western officials have been considering several options for how they can use the approximately $300 billion Russian central bank assets, most of which is held in the European Union, to provide economic and military support for Ukraine. That includes the European Commission’s proposal of using interest earned on those assets, using funds as collateral to borrow money for Ukraine or giving Ukraine the money directly.
There have been signs of growing momentum among Western policymakers to use Russia’s assets as Ukraine’s military situation becomes more dire. Rishi Sunak, Britain’s prime minister, urged his counterparts this week to be more aggressive in their efforts to find a lawful way to seize Russia’s assets. However, France and Germany have been urging a more cautious approach, and Russia has vowed to retaliate if its assets are seized.
In a speech before the European Parliament on Wednesday, the European Commission president, Ursula von der Leyen, expressed support for using profits earned on those assets to help Ukraine’s military.
“It is time to start a conversation about using the windfall profits of frozen Russian assets to jointly purchase military equipment for Ukraine,” she said. “Ultimately this is about Europe taking responsibility for its own security.”
Some legal scholars have argued that nations that hold Russian assets are entitled to cancel their obligations to Russia and apply those assets to what Russia owes for its breach of international law under the so-called international law of state countermeasures.
Yellen threw her support behind the concept of countermeasures at her news conference Tuesday.
“There is a countermeasures theory that I believe has strong justification in international law,” said Yellen, noting that Western nations still needed to enact legislation to ensure that seizing the Russian assets complied with their domestic laws.
The Treasury secretary declined to endorse an approach, saying allies should act together.
LeMaire said Wednesday that the countermeasures t heory was insufficient.
“We should really understand that taking such a significant decision, which is to take advantage of the state property, needs a very strong legal basis,” he said.
He went on to argue that a move to seize Russian assets should have the support of the G20, a threshold that is unrealistic because Russia is a member of that group.
“We should not add any kind of division among the G20 countries,” LeMaire said. “You will create more division at a time where we need more unity to support Ukraine.”