G7, EU leaders urge US restraint on sanctions expansion for Russia, China
Originally published at Europe in Review on May, 2024
Foreign ministers from the Group of Seven (G7) major democracies refused at a meeting in Italy on April 17-19 to endorse calls by the US to confiscate Russian assets and then use them to fund the war in Ukraine. [FRG Federal Foreign Office]
Germany, France, Italy, and the European Central Bank have opposed an expansion in sanctions. European Central Bank chief Christine Lagarde said in an interview at the Council on Foreign Relations on April 17 that moving beyond the current asset freeze to outright seizure would set a negative international precedent.
A move of this kind could justify Russia’s cessation of cooperation with international financial institutions, “breaking the international legal order,” and raising the risk that other countries may follow suit, Lagarde said. [CFR]
A week after the G7 meeting in the Italian city of Capri, US President Joe Biden signed a law providing American military aid to Kyiv, including a provision that allows the seizure of Russian assets in the US to partially defray the cost of supporting Ukraine. [POTUS]
In March, European leaders agreed to allow the profits from Russian assets in Europe to be channelled toward Ukrainian aid but not to seize the assets themselves. Following Moscow’s invasion of Ukraine, EUR 281 billion Russian assets were frozen worldwide. [AP] [Reuters]
However, only EUR 4.7 billion resides in the US, with about EUR 210 billion in Europe, with the majority of these funds in the Belgian Euroclear clearing house. The US will probably only seize assets on its own with European consent, according to press reports. [AP]
Differences on China
US Treasury Secretary Janet Yellen and Secretary of State Antony Blinken visited China in April to warn that Chinese banks and companies aiding Russia may face additional sanctions. [Bloomberg] [NYT]
Beijing has responded to previous US sanctions on Chinese companies involved in Russian trade by doubling their gold holdings in a year-long EUR 160 billion buying spree reported in the Telegraph on April 30, the day after a leading Chinese think tank published a report that claimed Chinese holdings of US treasury bills were becoming “hostages.” [Telegraph] [Bloomberg] [China Institutes of Contemporary International Relations]
European leaders are engaging in a delicate balancing act with Washington on China.
While the US reportedly threatened to expand Russian-related sanctions to more Chinese entities in April, German Chancellor Olaf Scholz took a different approach when he visited Beijing, Berlin’s largest trading partner. [DW] [WP]
He reportedly requested Chinese diplomatic assistance in negotiating an end to the war in Ukraine as well as commercial assistance in opening the Chinese market to greater participation by German companies.
(rw/gc)