SAUDI ARABIA FLEXES DIPLOMATIC MUSCLE: WARNS G7 OVER RUSSIAN ASSET SEIZURE

Wed 10 July 2024:

In what is perceived as a veiled threat, Saudi Arabia warned G7 nations earlier this year that it might sell off European debt holdings if the group decided to seize nearly $300 billions of Russia’s frozen assets, Bloomberg has reported.

The move, which was being considered to support Ukraine, was seen as a veiled threat demonstrating the Kingdom’s growing diplomatic clout on the world stage, underscoring its increasing ability to influence decisions made by some of the world’s most powerful economies.

This veiled threat, particularly mentioning French treasury debt, appears to have influenced European reluctance to support the asset seizure plan as initially planned. The Saudi Finance Ministry’s opposition is said to have played a role in shaping the G7’s ultimate decision to tap only the profits generated by the frozen assets, rather than seizing them outright.

The motives behind Saudi Arabia’s stance remain unclear. There is speculation that Riyadh was driven by self-interest, fearing that such a seizure might set a dangerous precedent for other countries in the future. Alternatively, it may reflect solidarity with Russia, given the close ties Riyadh has maintained with Moscow since the invasion of Ukraine, including their joint leadership of the OPEC+ oil cartel.

The incident is seen as an example of the growing sway of BRICS (Brazil, Russia, India, China and South Africa) nations over global events. Saudi Arabia is considering becoming a member. As these countries gain economic and diplomatic strength, they are increasingly able to challenge and shape global policy decisions that were once primarily dictated by Western nations.

The Saudi position on Russian assets also reflects a broader trend where issues like the Ukraine conflict are becoming wedge issues between the West and BRICS members. Similar to how Israel has become a point of contention, with BRICS nations often taking positions at odds with Western stances, the treatment of Russian assets has become another area of divergence.

The Saudi threat, whether acted upon or not, serves as a stark reminder of the Kingdom’s significant financial leverage. With net foreign reserves of $445 billion and a sovereign wealth fund approaching $1 trillion in assets, Saudi Arabia’s financial decisions can have far-reaching implications for global markets and geopolitics.

Ultimately, the G7 and EU agreed to a financial structure that will provide Ukraine with about $50 billion of fresh aid, using the profits generated by Russia’s blocked funds. The compromise solution reflects the delicate balancing act that Western powers must now perform, weighing their support for Ukraine against the potential economic and diplomatic repercussions from other global players.

The Saudi threat will be a seen as another example of the shift, which political analysts describe of a move towards a more multipolar world, where emerging powers can significantly influence global decision-making processes, even on issues traditionally dominated by Western nations.

-MEMO

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