G7 Finance Meeting Marred by Divisions Over Seizing Russian Assets
French Finance Minister Bruno Le Maire on Wednesday publicly
challenged U.S. Treasury Secretary Janet Yellen's view that it would be
legal to monetize some $300 billion in frozen Russian assets, revealing
deep divisions among leading industrial nations.
Le Maire, speaking after a Group of 7 finance officials meeting,
rejected the U.S. position and said France was convinced there was no
sufficient basis in international law to proceed and further work was
required.
He said any such moves should be fully underpinned by international
law and required the support of all members of the Group of 20 major
economies, which include Russia, China, and other countries that have
been critical of the United States.
G7 officials have been struggling for a year to agree on what to do
with Russian sovereign assets immobilized after Moscow's invasion of
Ukraine in February 2022. G7 leaders have asked for possible solutions
by June.
Their debate this week on the sidelines of a meeting of finance
ministers from the G20 major global economies in Sao Paulo showed there
is still a fair distance to cover.
"It's not necessarily a confrontation. We're continuing discussions
behind-the-scenes towards a common purpose, which is to seek measures
that align with international law," Japan's vice finance minister for
international affairs, Masato Kanda, told reporters after the G7
ministers' meeting.
On Tuesday, Yellen told reporters there was "a strong international law,
economic, and moral case" for deriving value from the Russian assets,
either seizing them outright or using them as collateral, and the
"countermeasures theory" justified such action under international law.
Yellen cited urgent need to help Ukraine after military setbacks in its two-year battle against Russia's invasion.
Le Maire, asked specifically about the countermeasures theory, said he disagreed.
"We don't think this legal basis is sufficient," he said. He said broad international consensus was needed.
"This legal basis must be accepted not only by the European
countries, not only by the G7 countries, but by all the member states of
the world community — and I mean by all the member states of the G20.
We should not add any kind of division among the G20 countries," he
said.
Russia has threatened major retaliation if the West proceeds with seizing the assets.
Despite the public bickering, one Western official, who asked not to
be quoted by name, said G7 officials were in strong agreement that
Moscow should pay for the damage it had caused. The official noted a
growing number of experts were confident there was a legal path to allow
seizure of the frozen assets.
Le Maire argued that the European Union using windfall profits from
the frozen assets already marked a significant step forward, a view
echoed by German Finance Minister Christian Lindner.
Lindner told reporters he favored using the interest accrued from
frozen Russian assets to support Ukraine in its war against Moscow,
calling it a "realistic step that is legally secure and which can be
implemented quickly."
Washington supports the windfall tax idea, but argues more
significant action is justified, given the egregious nature of Russia's
invasion.
Canada agreed on the urgent need to move forward with confiscating
frozen Russian sovereign assets to help Ukraine, Finance Minister
Chrystia Freeland said on Tuesday.
Kanda declined to comment on Japan's stance, but said the windfall
tax idea was likely gaining consent from the G7 and the broader
international community.
"Whether to take further steps would be something that needs more
discussion, including on what kind of steps are acceptable under
international law," Kanda said.
The issue has grown in importance since $61 billion in further U.S.
aid to Ukraine has been blocked by the Republican-led U.S. House of
Representatives.
Experts said it could take a year or more to unlock value from the
assets. Most, if not all, countries that hold Russian assets would need
to pass domestic legislation to make the actions possible.
On Tuesday, Yellen acknowledged there were risks, but downplayed
concerns raised by some Europeans that seizing Russian assets would
undermine the role of the U.S. dollar, euro, or Japanese yen as
important global reserve currencies.
