Saudi Arabia has issued a stark warning to the European Union, threatening to sell off EU debt securities if Western nations proceed with the confiscation of Russian assets.
Based on Mutual Respect
This development was reported by Lenta, citing sources familiar with the situation.
The Saudi representatives have made it clear to Western governments that any actions must adhere to international law. Despite this tough stance, the Saudi Ministry of Finance has expressed a preference for maintaining their current diplomatic and financial relationships.
“Our relations with the G7 and other countries are based on mutual respect, and we continue to discuss all issues that promote global growth and enhance the resilience of the international financial system,” the Ministry told Bloomberg.
Investments by Gulf countries in EU debt and securities amount to approximately 15.1 billion euros. Meanwhile, the European Central Bank (ECB) holds reserves estimated at 69 billion euros, with 51 billion denominated in various currencies and 18 billion in gold.
According to Andrey Loboda, Director of Communications at BitRiver, for Saudi Arabia to truly impact the market, support from Beijing and Tokyo would be necessary.
Can Trigger Chain Reaction
Although Saudi Arabia alone may not significantly damage the Eurozone’s economy, a massive sell-off of EU government debt could trigger a chain reaction, exacerbating the region’s already weak economic indicators.
Foreign investors own about 50 percent of France’s national debt, 28 percent of Italy’s, 40 percent of Spain’s, and 45 percent of Germany’s, according to Evgeny Shatov, a partner at Capital Lab.
The G7 countries have not yet reached an agreement on the potential confiscation of the frozen assets of Russia’s Central Bank. Currently, they are only considering using the income generated from these assets to support Ukraine.
The proposed scheme would provide a significant amount of funds to Kyiv immediately, with repayment being made from the income generated. However, the Russian Ministry of Finance does not expect these assets to be unfrozen in the near future.