Geopolitical grand larceny and its risks
Mar 24, 2024
One of the Ten Commandments says, with awkward bluntness: Thou Shalt Not Steal. Predictably, some are inclined to read certain qualifications in to this prohibition. As it happens, this sort of adaptive-thinking underpins arguments made in a recent article in the leading US journal, Foreign Policy.
Briefly, in this article entitled: “Europe Edges Closer to ‘Plan B’ for Using Russian Money”, Keith Johnson canvasses expert views on whether the Global West should (to benefit Ukraine and its Western sponsors): back a complete seizure of all these moneys; or opt for siphoning off the earnings presently generated by these assets.
The money in question comprises around US$300 billion in Russian Central Bank foreign exchange assets held by Western (mainly US and EU) countries and frozen after Russia’s invasion of Ukraine in 2022. Immobilised they may be – but all parties know these assets presently remain the property of the Russian Central Bank. How to get around this legal (and moral – see Moses above) difficulty?
Timothy Ash, a financial sovereign strategist and a fellow at Chatham House, who is extensively quoted, argues that Ukraine is a national security priority that must be funded and: “In the end, you do whatever you have to do and the only credible source of funding for Ukraine is from Russian assets.” Russia, of course, has long-since been categorically black-hatted by Western governments and media for its entirely unprovoked invasion of Ukraine thus, apparently suspending Biblical Commandment concerns.
Meanwhile, the US has some form when it comes to the faithless confiscation of property belonging to US-branded, geopolitical-apostates including, most recently, Afghanistan, although that attempt has encountered certain legal snags.
Apart from legal and ethical concerns, this renewed lift in Western confiscation zeal (as the Ukraine war veers away from US-NATO plans) once more raises critical questions about the global reserve currency status of the US dollar. Ian Bremner (writing about a year ago) must be right that a central fact protecting this role of the dollar is that, ”You can’t replace something with nothing”. But all this boat-rocking is amplifying the motivation to coin viable alternative somethings. Which is one factor likely shaping EU thinking, as the article explains, in favour of the Plan B, less radical income-siphoning alternative.
This article incidentally reminded me how, a good long time ago, someone well-informed about the slippery shortcomings of human nature noted that: “Moses did not come down from the mountain with the Ten Guidelines.”
Richard Cullen is an Adjunct Professor in the Faculty of Law at the University of Hong Kong. He was previously a Professor in the Department of Business Law and Taxation at Monash University in Melbourne, Australia.
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