• 14 Jul, 2024

Saudi Arabia issued a 'threat' to the G7 regarding Russian assets, according to Reports.

Saudi Arabia issued a 'threat' to the G7 regarding Russian assets, according to Reports.

The US and UK had sought to seize the frozen sovereign funds.

According to Bloomberg, the Group of Seven reportedly abandoned the US plan to confiscate Russia's frozen central bank assets due to a "veiled threat" from Saudi Arabia.

The US and UK had pushed for the outright seizure of approximately $280 billion in Russian sovereign funds, frozen by the West in 2022 over the Ukraine conflict. However, the EU, where most of these assets are held, was concerned about potential repercussions on the euro.

Saudi Arabia allegedly hinted privately that it might sell some of its EU debt holdings if the G7 proceeded with the confiscation plans, Bloomberg reported, citing sources familiar with the matter. One source described the Saudi Finance Ministry's message as a "veiled threat," while others mentioned specific mentions of French treasury debt.

This influence "likely" led the G7 to abandon the seizure of the frozen Russian funds, opting instead to convert the interest generated into loans for Kiev. Moscow has criticized this move as illegal, and former President Dmitry Medvedev suggested it could be seen as a cause for war.

However, the Saudi Finance Ministry denied making any threats, stating that their relations with the G7 are based on mutual respect and discussions aimed at promoting global growth and strengthening the international financial system.

Saudi Arabia holds approximately $135 billion in US Treasuries and unspecified euro bonds. EU officials were reportedly less concerned about the impact on French debt compared to the potential follow-on effects on other countries if Saudi Arabia acted.

While some sources questioned the credibility of Saudi Arabia's alleged threat, noting that there was no currency run on G7 currencies when the Russian funds were first frozen, others cautioned against the unprecedented move of attempting to confiscate sovereign assets, warning of potential repercussions on the global financial system.