There are fears that these litigations might expand beyond Russia.
Moscow might push friendly jurisdictions such as China and Saudi Arabia to target target Western assets in their own countries, potentially tarnishing their reputation in the eyes of international investors.
Experts suggest that fears from these countries, that their assets in Europe might be next in line for confiscation if they fall out of favor with the West, are overblown.
“The only countries that should be concerned are those planning an illegal and unprovoked invasion of their neighbor,” said Tom Keatinge, a financial crime expert at the RUSI think tank. “And I don’t think any of those countries [China, Indonesia, and Saudi Arabia] are planning this.”
Nonetheless, arguments focusing on financial risks resonate in some European capitals. The German government and the European Central Bank argued that confiscation might undermine investors’ confidence in the EU’s financial system.
Any potential but unlikely market turmoil caused by a full-scale confiscation might harm countries like the Gulf states which own huge stocks of foreign currency, Keatinge added.
If the G7 group of industrialized countries decides to seize Russia’s frozen assets, officials expect Russian courts to successfully challenge the decision. A court ruling in Russia could potentially leave a black hole in the balance books of the financial institutions holding the assets.
These bodies would have to tap into their cash reserves to make up the loss. This could involve using, as a last resort, other sovereign funds that are deposited in their accounts.
