Biden’s ‘crazy’ idea could spark global financial crisis – senior Russian senator

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According to Konstantin Kosachev, vice speaker of Russia’s upper house of parliament, a White House proposal to grab frozen Russian funds and use them to help Ukraine is not only illegal, but also extremely hazardous, since it may destabilise the entire global financial system.

The senator’s remarks came after the New York Times reported on Friday that the Biden administration had increased talks with US partners to seize more than $300 billion in Russian foreign exchange reserves that had been frozen since the beginning of the Ukraine crisis.

On Telegram on Friday, Kosachev described the effort as “crazy,” claiming that it lacked any legal foundation. He remembered that under customary international law, central banks’ sovereign funds are protected by a particular immunity, and no jurisdiction is permitted to impose any coercive measures on them.

Furthermore, the senator argued, seizing Russian assets would be a violation of both international and domestic law. He mentioned the Foreign Sovereign Immunities Act of 1976, which safeguards the assets of foreign central banks, and added that many US allies have comparable legislation.

“International judicial and arbitral practice confirms that seizure of funds belonging to central banks and sovereign wealth funds is impossible,” Kosachev stated.

By ignoring this practice, the US is creating a “very dangerous precedent” that will affect the entire global financial system, according to him.

A possible seizure would prompt fast reaction from Moscow, with the requisition of frozen Western assets in Russia on the table, Kosachev warned. He emphasised that Washington’s decision would be viewed as a “bad signal” in many countries, including China and Saudi Arabia, which would question the rationality of keeping their cash in euros or dollars.