The Guardian: Calls grow to spend all of Russia’s frozen billions on Ukrainian defence

Russian Currency Reserves are held in the Euro-System. About EUR 200 billion are now frozen by European sanctions against Russia.
European calls emerge to confiscate these funds to either spend them on ammunition, on reconstruction of Ukraine or simply on reimbursement of Europe’s support of Ukraine’s war efforts against Russia.
Russia cannot do much. It is trapped with its national treasure of EUR 200 billion in the hands of Europe. It is a normal consequence of war that countries which are at war repossess and confiscate assets of the other. But – is Europe at war with Russia? Which law or right or custom applies to allow this confiscation between countries that are not at war? It is a new territory in International Law. In fact, no precedents, rules or laws exist.
As much as it is appealing to confiscate another state’s asset to protect or favor your friend state, the less there are rules or even justifications for it. If Europe considers itself at war with Russia, yes, there may be a basis for confiscation. If Europe wants to defend the interests of its ally Ukraine, then Europe must decide of either entering the war or stay aside. Staying aside and confiscating Russia’s assets may become equal to an act of an illegal pirate, and can be considered itself as an act of war. The same can be said about sanctions which are, depending on their spectrum, either an act of sovereignty (if it only concerns internal measures) or a violation of international law (if applied internationally).
The new Doctrine of Countermeasures which found a basis in a recent UN Resolution is cited by the EU to allow a confiscation. Confiscation as countermeasure against the breach of international law by another state – it is a unilateral decision by one state against another state and therefore never subject to any judicial or other control. Such countermeasure may always be a prerogative of the more powerful or of the more daring. They bring the risk of retaliation and escalation as the target state would consider them as acts of war.
Finally, the international community will consider a state confiscating assets of another state suspiciously. It will have a certain impact on international trade and finance as transnational transactions may become riskier if the practice of easy confiscation may get established.
European bankers have, therefore, warned against confiscation of Russian assets as a precedent to apply in future conflicts as most other international lenders would reduce or reevaluate their risks in Europe – with expensive consequences for Europe. Alone the increased risk premium in form of higher interests will surpass the quick gain from confiscating the Russian Euro 200 billion deposit in very short time, an extra-cost to be charged directly to the EU’s taxpayers. The UK spends yearly ca. £100 billion in interests on outstanding debts, Italy EUR 64 billion, France EUR 45 billion, Germany EUR 34 billion. These amounts will suddenly increase if a confiscation of Russia’s debts will become true.
Experts warn of terrible consequences of a confiscation of Russian assets. The EU and its members will have it harder and it will be more expensive to raise financing, the increase of interests will further bring public finances towards abyss. China and other BRICS countries will review their lending risk to the EU and will demand risk compensation in form of hundreds of billions. And what will be the additonal costs of Russian retaliation? Russia’s risk of having its assets confiscates is EUR 200 billion – Europe’s risk is bankruptcy.