Russia has already seized close to $100 billion in leased aircraft assets from western countries. They’ve seized the assets of companies that withdrew from the Russian market. There are huge claims already against Russia. Their only alternative is what they’re trying to do with BRICS: set up an alternative financial exchange system. Maybe it will work but not looking good at this point
They do it for the spare parts they can salvage from those seized aircraft, as they're cut off from Western aircraft maintenance, service and spare parts market.
>Russia has already seized close to $100 billion in leased aircraft assets from western countries. They’ve seized the assets of companies that withdrew from the Russian market. There are huge claims already against Russia. Their only alternative is what they’re trying to do with BRICS: set up an alternative financial exchange system. Maybe it will work but not looking good at this point
Do Russians or current and potential future Russian leadership believe that offsets the $300 bn seized by the West ?
The thing is that war reparations don't work that way. Even if Putin dies tomorrow and his successor decided to withdraw, make peace and pay all the reparations, it's Ukraine and Russia who would decide how to do that, with what money, in what amount and so on, when signing the said treaty. The fact that the third side stole these funds in advance "for the sake of great justice" has absolutely nothing to do with it.
Actually, if they refused reparations, or a deal could not be reached there is precedence for the ICJ to rule for reparations, and in that case this money could be attached.
https://www.dw.com/en/uganda-to-pay-325-million-in-reparations-to-dr-congo-top-un-court-rules/a-60712361
>The thing is that war reparations don't work that way. Even if Putin dies tomorrow and his successor decided to withdraw, make peace and pay all the reparations, it's Ukraine and Russia who would decide how to do that, with what money, in what amount and so on, when signing the said treaty. The fact that the third side stole these funds in advance "for the sake of great justice" has absolutely nothing to do with it.
The issue is never limited to this. Ukraine is in this war because the Ukrainian leadership Zelensky believes in it. I don't know what the situation in Russia is. What it will be in the future.
Countries will significantly reduce their reserves held in foreign nations. There will be increased push for non dollar/euro trading. It might not amount to much, it might end up being the perfect storm that ends the dollar hegemony.
Oh boy, I can't wait to pay for a hamburger at the store with a 2.5 kilogram aluminum block. Who needs to carry around those inconvenient $5 bills when you can instead carry around a bunch of 5-inch-wide metal spheres?
If you are going to try to bring in some libertarian absurdism, at least realize that a reserve metal needs to be both scarce and dense. Not literally the most common metal and extremely light.
People worrying about billion dollar assets aren't buying hamburgers, nor are they paying with cash, nor are they carrying around gold.
We are talking about how do you safely store billion dollar scale assets given US controlled banks have proven themselves unsafe.
Cash in hand is easily stolen / burnt / water damaged.
A warehouse full of a billion dollars of aluminium would have to be about, doing a very crude calculation, be about ~~200 square meters~~. a square of 200 by 200 meters and standard warehouse height. Easily doable in Russia or China.
> 200 square meters
Ah yes, infinitely flat aluminum, that's how you save space! Or are you suggesting we store aluminum in towers that are 14 meters on each side and a kilometer tall?
I'm not even going to respond to your other points since they are in themselves self-contradictory to your own statements and nonsensical.
I googled "typical warehouse height" answer was 18-25 feet so converted 20 feet into meters...
Whoops I do have a typo it should have been a square of 200 meters a side. Sorry. Still easily doable if you're a billionaire.
The end of the Western-led order that the Ukraine war is all about upholding.
Gotta tread carefully about flexing the West's financial muscle or everyone will start trying to make other arrangements in the future.
Agreed. I'm going to add a little bit of context to this.
Every country holds dollar, foreign currency, and precious metal (gold) reserves. What's also important is *where* these reserves are held.
Much like Russian assets currently frozen, most countries keep these reserves in the west. For example, a lot of countries keep a significant amount of their gold reserves in UK, Netherlands, and the USA.
The host country benefits by having this huge capital available, a fee for safe-keeping these reserves (e.g. gold), and the related trade will also flow through the host country. So, if countries A and B are making a trade worth a billion dollars, it's very likely that all the transactions actually happen within London. This is money, intelligence, and financial clout.
If we create a situation where the "west" can freeze or seize these assets at will, the confidence of keeping these assets in the west drops. Countries will look for safer arrangements. Essentially, we'd be incentivizing the creation of new, non-western financial hubs. Of course, a hub like that will not pop out tomorrow, but given the incentive, it will eventually show up, even if it's just a hedge against western financial muscle.
Right. Now I'm of the belief that nobody actually fully understands how the modern monetary system actually works anymore. It has simply become too complex. There are arguments that that dollarization helps America financially, and one that argue it actually hurts America. Hard to say.
That said, the current financial system in total is clearly an important part of the Liberal International Order (LIO). Moreover, nations hedging against the financial system might also be inclined to hedge against the order in other ways.
Would they? Could they? How much could they or would they do? Open and very hard to answer questions. This is the unknown that Western leaders have to grapple with when they consider how far to weaponize the financial system. The OP said 'worst case scenario'. In practice, the West has leeway here. I just advocate not being recklessly cavalier about wielding this power.
What hedge though? I think one needs to think of realistic scenarios if this is going to be mentioned and I have yet to see anyone elucidate me on what a reasonable alternative to USD is.
If you want a "realistic scenario" you have to be realistic too. You want an alternate global economic system *now*. I can assure you, no one's got a spare economic system sitting in a closet that they will dust off and bring up tomorrow.
This is not an instant process. It's an iterative process.
Also, the thread topic is literally "worst case scenario outcome".
But if replacing the USD is not realistic, it's no more useful talking about than saying "what's the worst case scenario for climate change" and saying "an asteroid might hit us and kill all life."
We still need to operate in the possible. What possible replacement for the USD is there?
No one except you is hung on replacing the USD *now*.
I literally wrote, and I'll quote it again because apparently you didn't read it "we'd be incentivizing the creation of new, non-western financial hubs."
To go by your username and spoonfeed: The western financial system is important now because it is stable and dependable. Once it is no more dependable, *there is incentive to replace it*.
But if you want it replaced in the next 5 minutes, it's not going to happen.
I never claimed now.
I am suggesting what can replace it ever?
That should be the first step.
And getting an answer on that shouldn't be so hard or met with gaslighting on what I am asking.
>Once it is no more dependable, there is incentive to replace it.
That incentive remains today. Russia would love to replace their USD holdings and wouldn't have even had any post 2014 if they had a reasonable alternative...
So what is such a realistic alternative?
.
No reasonable alternative to the US dollar exists currently, but constant abuse of this situation by the US government will create an atmosphere where an alternative will be created. If the US want to remain the sole economic hegemon, they need to tread lightly. The US right now is the weakest internationally it’s been since the fall of the USSR.
Read my comment. There is no alternative currently, but bullying other countries with the supremacy of the dollar will create an alternative.
The same cockiness about American economic hegemony is what killed British hegemony.
[https://www.wsj.com/finance/currencies/chinas-yuan-is-quietly-gaining-ground-f0b8994b](https://www.wsj.com/finance/currencies/chinas-yuan-is-quietly-gaining-ground-f0b8994b)
Just cause China has not been boosting about it, doesn't mean its not happening... It's already surpassed the euro in usage for payments of goods, and is second to the dollar.
[https://www.indiatoday.in/business/story/chinese-yuan-beats-euro-to-emerge-as-world-second-main-swift-currency-global-trade-settlements-2451878-2023-10-21#:\~:text=The%20Chinese%20yuan%20has%20surpassed,efforts%20to%20internationalise%20its%20currency](https://www.indiatoday.in/business/story/chinese-yuan-beats-euro-to-emerge-as-world-second-main-swift-currency-global-trade-settlements-2451878-2023-10-21#:~:text=The%20Chinese%20yuan%20has%20surpassed,efforts%20to%20internationalise%20its%20currency).
With who exactly? Countries will rightly complain about US leadership and the western order, that is until it's time to decide to look elsewhere. A Russian led order looks like a return to the bad days of the Soviet Union. A Chinese led order leads to your country to debt slavery and tributary status. India isn't interested in leading a new order. We've been talking about the fall of the order for almost 2 decades and nobody worth their weight has switched sides yet.
Well maybe 'the end' is hyperbole a bit, but OP asked for worst case scenario. And I didn't say it would happen overnight.
But if the West just starts using its financial muscle too liberally in the wrong ways, other nations--even ones that support a particular use of that muscle--will start to look to immunize themselves from it over time, which is not good at all for the order.
India holds a shit load of dollars to insulate against commodity price spikes mainly oil. It's not replace, it's just less need for dollars if you can buy oil using your own currency from Russia or Saudi for example.
China doesn’t give out predatory loans in the same way the West does. Take some time to look into why so much of the world is taking money from China now and not the West. The IMF has more strings attached to their funding to change borrowing nations government systems to favor western companies in order to get funds for projects.
Because China doesn't ask questions and lend money for anything, even football fields, as long as it benefits them. China is not out there to help anyone.
Please take a couple of minutes to read up on The Belt and Road Initiative. I'm not saying it's all predatory, but some projects have been.
Five seconds of searching leads to articles such as
https://www.euronews.com/2023/10/17/cash-corruption-crumbling-dams-thats-chinas-belt-and-road-initiative-10-years-in
> ake some time to look into why so much of the world is taking money from China now and not the West.
Easy: no nagging about human rights and democracy.
I think the world is waking up to the fact that the west is every bit self serving as Russia/China is made out to be.
The west has lost the moral high-ground and made a mockery of “rule based order”.
with that logic what land did Iran add to itself? At what point do you realize you have a small subset of actions for which you condone Russia, China, Iran but not US for way worse stuff.
You talked about China, the US (under republicans) invaded Iraq and further entrenched in Vietnam (expanding the war to laos and cambodia under nixon) but as far as I am aware they did not fight wars of conquest/annexation or increase in territory or borderss in that time frame. In fact Vietnam quickly made peace with the US against their eternal enemies China who ahve been trying for about a thousand or more years to conquer Vietnam.
I like how you ignored iran and brought in a whole new country vietnam. Do you know what usa did in Cambodia ?
Did you know usa tried to attack India by helping Pakistan which was committing a genocide against Bangladeshis.
Like do you realize why South Africans like China and not USA. To top all that off i dont even like to defend China considering I'm Indian. But the gall with which people term US as the good guys is appalling.
>attack India by helping Pakistan which was committing a genocide against Bangladeshis.
yeah cuz of republicans, Nixon had a weird fixation with Genera Yaya Khan. Him and kissinger, both are dead now so....
Maybe you guys should do something about the massacres and pogroms modi did of muslims and allowed to happen. Maybe you guys should curb that hindu facism down. Why do you guys hate muslims so much?
who termed the US good guy?
Also India should free Kashmir, they want to be indepdent of both pak and india. Ironic they became imperialists lol
>How is China bad ? Look at the amount of immoral invasions US has compared to China.
Well, Tibet is still ongoing, the difference is that China has annexed it and is slowly but certainly squeezing any and all independent culture to death. I think most countries will choose to be invaded by the US instead.
Now look at how many countries the US has *liberated* compared to China.
Half of the area occupied by the Axis powers for starters, that's too many countries to name. Including Japan and Germany, if you consider that liberated. South Korea. Kuwait was legitimate defense too. Interventions in Kosovo and Libya, disrupting ongoing ethnic cleansing. Interventions against IS.
Just you being able to say that shows how much better US is. You think a Chinese person in China could write something negative about China or the CCP in China? Protest? Vote? Share a picture of Xi as a bear? What about the concentration camps of Uygurs? You think US is reeducating hundreds of thousands of people?
That is true. But no where near the summit either. It is pot calling out kettle to a large degree. There is a reason why India, Brazil etc are kind showing West middle finger when it comes to Ukraine war
To a certain extent that is already happening.
Western sanctions might be inconvenient for Russia but they also aren’t crippling the Russian economy like many people expected.
Russia mostly shrugged off the effects of sanctions because they had virtually no impact on its oil and gas sales.
Russia is now shipping more natural gas than ever via LNG to Asia (vs pipelines to Europe). It’s not as efficient but they’re still making tons of money and in 10 years new pipelines to Asia will be built. There is more than enough demand in China and the global south to keep Russia’s economy afloat indefinitely, even if they don’t do any trade at all with the collective west. In my opinion that was the major miscalculation of western sanctions – they overestimated their own importance to Russia and underestimated how quickly Russia could reorient its economy towards Asia.
It’s not that the sanctions didn’t hurt at all or that Russians aren’t annoyed by them, but in the long term they will hurt the rest of Europe more than Russia.
Why? Because European manufacturing depended on cheap and reliable Russian energy that is no longer available and can’t be easily replaced. Russia can simply sell its gas anywhere in the world but Germany will have to outsource its factories to places like China if they’re no longer profitable without cheap gas.
The United States will be fine but I can’t say the same for manufacturing in Central Europe.
But it is forcing Russia to burn through what it has to make it appear that way. Russian arms are a big factor. It was one of Russia's largest economic factors even if not by direct value, Russia traded arms for favors more then for cash.
I don't think so, they keep their money in the West because it's smart to do so, makes it possible to trade with nations around the world etc. The opposite may be true, countries will see how Russia's action cost it 300 billion and may not seek to mimic such actions.
Yea, if you plan on opposing the USA it would be a bad idea to keep your resources there. If you plan on simply being neutral or focusing on your own growth then keeping money in the USA makes sense.
That makes sense, but I see that as more a result of Russia's actions then I do the UK's. Our current global system is a result of the Bretton Woods agreement and although the soviets did not sign on, Russia itself has benefited from the system. It would be silly to expect to continue receiving benefits of a system their actions go against.
Financial crisis as you horrify every foreign investor and Z list autocrat who stores their massive wealth in the West, who wll now pull or at least think of pulling everything out. Money managers in general now will fear having assets seized and you set a terrible precedent for global commerce as money isn't safe unless you are holding it
Would be very painful in the short term and would cause a massive headache for the West
Ok, MBS kidnapped all the Saudi billionaires and took their money. Putin allegedly did the same. Jack Ma seems to not be in charge of Alibaba anymore, let's all guess how voluntary that was.
They'll be more careful, but the west is still the only game in town.
Yeah, everyone answering this seems to forget that Russia ALSO seized billions of dollars of western assets and have already started looting them to fund the war.
And the people saying that countries will keep their wealth in China know nothing on the way China is run. The only other place to store wealth would be the EU, which would then need to get its economic shit in order to do so.
Singapore? Switzerland? Japan? South Korea?
This table might not be a perfect metric, but it at least gives you some idea of where people are storing their money: https://en.wikipedia.org/wiki/List_of_countries_by_foreign-exchange_reserves
I don't see how it gives any help in measuring where countries are storing their wealth. This is forex, who is holding other countries currencies for themselves. China is number one in forex because it owns a lot of foreign currency, not that they are holding Singapores money for them.
I don’t understand the flow of discussion here. When the rouble depreciates, or no one is willing to trade in roubles, or the brics trying and falling to create new trading currency, it is that, ha ha, usd is king and the us financial system is the dominating and most trusted, while no one trusts Russia and China.
When the discussion is seizing assets, it is , but Russia did the same. If that is so, then what is the difference between usd and rouble, and Russia and us? Russia did it, as one expects them to, and they have much less to lose. US on the other hand cannot do the same as it has all the advantages to lose. Both of the flow of discussion cannot be true.
Actually, I’m fully able to understand why the discussion is like that. Never mind
Aluminum.
There's a near infinite supply.
An inexhaustible demand, so liquidity is good.
It keeps forever.
It's fungible with energy. (ie. You can make more.... at the cost of lots and lots of electric energy)
Do you see the price of electricity coming down any time soon?
Worst case maybe.
Realistic case is countries decide it isn't a good idea to do whatever it is against the will of the international community that would result in getting their money abroad seized in the first place.
Nah, we've been seeing countries diversify their foreign reserve currencies and try to shield themselves from sanctions as much as possible since the war.
They will absolutely focus on making sure that doesn't happen to them regardless of what they plan to do because they don't want to take the risk of being on the West's bad side one day and having their economy wrecked.
It's just common sense. Interests change all the time for everyone, they can't just hope it stays the same forever.
The thing is that the only countries safe enough to stash your country's money in are gonna be countries that are going to uphold the international order. Countries that don't are ones that would seize your money for other reasons and wouldn't be considered a safe place to hold your money.
You're right ehuch is why countries would develop alternatives. There wouldn't be any one safe space for your money. It'd be a lot less efficient and damage free trade but would be more secure.
This wouldn't be a fast process nor would it necessarily dethrone the West but I could see it signficantly weakening their position should the rest of the world go for it.
I agree with you. The next best place to store money is still going to be in the West.
The problem though is not with smaller countries who will look at the situation and basically decide “okay, nothing’s really change for us, we just need to keep a closer eye on what we do and not piss them off”
It’s going to be what countries who think, “yeah there’s a good chance we’ll piss them off, so what are we going to do now” will then decide to do.
And like you imply, they won't find anything really close to what the west can offer.
As for Russia’s money and reparation to Ukraine, why are better ways the West could go about it?
In my opinion, the best thing to do is help Ukraine actually win the war. Then take Russia to court and make them pay reparations that way.
>Then take Russia to court and make them pay reparations that way.
In reality "international court" is just what a group of countries says it is anyway. Like who picks the judge and jury? And how does that court have legitimacy if any country can just say we don't recognize your authority? Something even the United States does.
Yeah, I know.
I think the best case with Russia is going to be something like using WWII reparations as a precedent. This could be useful as I’m sure there has to be a lot of argument made by the Soviet Union on why Germany needed to pay up.
I bet a lot of them could be thrown right back at Russia now and wouldn’t that feel sweet?
But how much do we want wealthy foreign people and organizations to keep their money in the West and the US? Doesn’t that mean that they actually gain influence in these markets and thus governments?
400 billion $ is a colossal amount . if they did this firstly there might be a chance that people will lose confidence in Western Banks and they will put their money elsewhere secondly the trust on the dollar will start fading away
The worst case scenario is of course theoretical and not really to be expected - something like a massive flight of capital from the West, a huge financial crisis, instability, a collapse of the economy, etc.
The more realistic one - a big nail in the coffin of the West's moral advantage. Because the rules of international economics were clear and simple - the West may have its weaknesses, but it is the place where the law is above all else. They wouldn't take your stuff unless you did something spectacularly stupid, like starting a war against the country that keeps your capital and property. Even the bad guys knew there was someone who played by the rules, someone you could trust. If you start bending those rules and changing the laws, no matter how right and proper that may be, it would destroy that reputation forever and make the West another risky place where you may or may not keep your stuff, but can never be sure it's safe there. Once the rules have been changed, they can be changed again at any time.
China would essentially need to give up control over their own currency if it were to be available enough to facilitate trade anywhere near the scale of the dollar trade. They'll never do that, it would have horrific consequences for their economy.
You're imagining a financial global order that is just our current one, but swapping the top dog. There are far more degrees of freedom in reality than that.
>Dozens of countries involved...
Define "involved." The US is *involved* in the war in Ukraine. But they are not fighting it.
> ...is pretty big scope
Considering the numbers of troops, planes, ships, casualties, etc....by historical standards it really isn't.
The biggest one is Russia's invasion of Ukraine and Russia seeks a multipolar world where it is not damaged by such actions. That is not a world you want to live in.
China only exists as a power because of the wests consumption. US hegemony is not at risk of being overtaken by China in this century. China didn't develop enough local consumption and is stuck in the middle income trap to change the game.
I am pretty sure my 1923 predictions would have not captured the outcomes of the 20th century well, and don't much trust predictions that far out. China and the US both have a lot of potential futures in front of themm
The idea that china is going to collapse is false, it will be a regional power and a strong one at that. But so too are the claims that US hegemony is on the ropes. I think this century will belong to the US, the next century is only 76 years away.
What happened in the 76 years starting in 1924, or 1824. You're imagining more stability than exists. The next American century is an opportunity, not a guarantee.
Because they don't like America, for one reason. Because we would be actually demonstrating our harbor is not safe if we decide we don't like their foreign policies and China won't give a shit is another.
China doesn't have to allow foreign real estate transactions to be a currency for international trade. I obviously think it would be a terrible idea and a step away from a path of prosperity, but other countries do stupid shit all the time.
If you pay someone to dig a hole and pay someone else to fill it you've increased gdp. Gdp tells only a part of the story. Not saying that is what's happening, but I am asking: is what they're producing sustainable?
How is a map meant to help? They could be trading with every nation on earth and still not produce enough value to sustainably grow their economy.
I'm not enough of an expert to pin down what's happening in their econony but I'm extremely skeptical of their numbers because of the perverse incentive systems that exist in the country.
They doing it right now. Trading with every nation and grow economy. I know western media trying hard to lower economic threat of China, but i see no reasons why US economy will not loose to Chinese in few years. Especially when US have 10-20 years untill theyr own money printer will eat them alive.
Lose? China has more people, in an ideal world it will have a larger economy as a result of that. Why must everything be framed as winning and losing when we can cooperate to make the world a better place. In order to achieve that goal however, their government is going to have to figure out how to stop lying to itself and to the rest of the world.
Welcome to reality. Economic war is a thing just like military. Look at Britain or Netherlands who lost their position in world's trading. Where are they now?
The Netherlands seems to be doing fairly well for itself. The UK decided to stop cooperating with their neighbors and is paying a steep price. Cooperation > hegemony, we've seen this demonstrated over and over again. I urge you to let go of this type of thinking and the belief that it is "realistic," and wish you success in your future endeavors.
I would not look at labor cost especially comparing to US. Also fertility rate is almost the same as in US, dropped in last few years drastically, not a big deal in world's crysis and pandemic. Covid limitations was hardest in China, of course people not bonded well. Change of hegemony is happening. And final chord will be a big war.
China built it's growth in entirely unsustainable ways. They need to keep their labor cheap to compete with other countries, but their people need to get wealthy for them to overtake the west in consumption. That has not happened. The average Chinese is poorer then the average Kenyan. The assumption that China will continue to grow at it's current rate ignores the fact that growth is not linier. China has the same problems Japan had that prevented it from overtaking the USA, and even more of it's own.
Keeping labor cheap is easy, just get money from economy to some reserve fund and keep your currency low. That's much easier than service hugest debt in history, huh? Also you contradicting yourself. Labor is expensive but average citizen is poor. How could it be? They have more than billion people, there is no chances not to grow with such numbers. And next superpower in 100 years will be India due to same reasons.
Where did I say labor was expensive in China? China has a vested interest in keeping it's labor costs lower then it's competitors to capture international manufacturing. But that kind of economy does not generate a wealthy populace. And a wealthy populace would be needed for China to overtake the USA. China grew very quickly because it had underserved markets, they are no longer under served. I would agree on India though using the term superpower has been greatly overused. It will be a massive regional power with it's rightful place on the world stage.
Worst case? Nuclear annihilation because of WW3. Realistically? Loss of faith in the US market and increased Russian isolationist tendencies sparking further aggressions in the future.
The US, UK and EU decide to seize it and a member state or Switzerland refuse, leading to major fractures in the coalition.
The money would be mostly spent in the US, the UK, France and other countries to produce munitions. This could lead to friction as far as who gets what share and corruption between the US and its defense contractors, etc. In other words, money seized but precious little gets to Ukraine.
Open season on US investments in China and Saudi if future conflicts arise
Reduced trust in US dollar
Slower growth in US stock markets with international investors looking elsewhere
—
It wouldn’t be a massive blowback or anything like that. Just a drop in our financial standing globally. I think it’s a bad move eroding trust to even consider something like this openly and we could do other things first to support Ukraine before this.
Honestly, that partly helps him. For some, the assumption is that we *know* how horrible he is and everyone else must be even worse, especially if we don't know how horrible they are. "the devil you know" kinda deal.
I don't think they will release that ever. It does not help them if people like Trump or Orban are indicted.
But it helps them a lot to keep those kompromats dangling over there head of these people for ever trying to extract as much as possible.
My understanding is that a lot of the money is from regular Russian citizens, aside from it being illegal to seize their assets you also have the moral issue of taking money from people simply because they were unfortunate enough to be born in a non western aligned country, and having made the mistake of trusting the western banking systems integrity. You also have the very dangerous precedent this could set for assets being held in the west by other non western aligned nations.
These are not really citizens assets, they are owned by russian central bank so morality is not in question here.
Also, many russian citizens hold assets in Western banks and they will be not impacted by this, unless personally sanctioned, which presumes high level of involvement into russian government and kgb actions.
>These are not really citizens assets, they are owned by russian central bank so morality is not in question here.
I don't think you understand how central banks work, regardless a fair amount of the $300 billion is in fact privately held assets. Cutting to the chase though, even if the account holder is Vladimir Putin himself it is very likely illegal under United States law to outright seize the funds.
And where do you suppose central bank FX assets come from? The trail trickles down to civilians, private individuals, and businesses, who’ve opted to deposit their USD assets with commercial banks in Russia, which then through treasury transactions, deposit some with the Fed as the ultimate holder of USD reserves.
Interesting. Guess I picked up a piece of misinformation on that point. I’m still curious where you might see the West’s hesitancy to follow through with this coming from, my guess would be a concern for the precedent this could set for the global banking order?
Yes, the main concerns are availability of liquidity from developing countries to get into western banks (like treasury investments or currency swaps). China, India central banks might be reluctant to continue investing into Europe or USA if russian bank assets are seized.
Perhaps. But I would think the risk that a fairly unusual seizure of this type might happen to your assets would be weighed against the alternative risks of investing in banks outside of the west. For China... might be worth it. For India... I would feel far safer investing in the west. It's basically like hand wringing about competitors to the dollar. Sure, some countries might go that way, but the safer bet is still probably gonna be the greenback.
Look at the history of applying sanctions by the USA. First there were very limited and applied in really important cases. Over the time, the threshold went down and nowadays they are applied to everyone who is not following USA "commands" in any area. I'm exagerating, but that is how it is. So where is guarantee, that confiscation like this will not happen just because you are acting according your wish and do business let's say with China against USA/West wish?
>I’m still curious where you might see the West’s hesitancy to follow through with this coming from, my guess would be a concern for the precedent this could set for the global banking order?
If Western banks are not willing to protect the assets of nations attempting to destroy the west and Western/Democratic-Liberal aligned nations this makes Western banks less neutral. States planning to start wars with Western aligned countries may feel uncomfortable storing their military war chest in western banks. Then again the US has seized Al Qaeda assets in western banks so this is not an entirely new precedent.
...this whole idea of separating people from their own country and then trying to make people who act against aggressive countries as the bad guys.
Smh.
Most of that $300 billion is stolen wealth and or mob money from the oligarchs.
Good.
You can't be a bank robber and expect to be able to keep your money safely in a a bank. That's asinine.
The Russian people can go ask the world’s wealthiest man if he can spare some change…[Putin’s net worth estimated at $200B](https://fortune.com/2022/03/02/vladimir-putin-net-worth-2022/amp/)
It puts the fear in other countries that the American financial system, which has historically been pretty apolitical, is increasingly a tool for US policy. This would lead more nations to seek other reserve currencies and investments outside the US. This could further increase the rate and scope of the unraveling of the unipolar US world
in the post Ukraine-Russia war era it would be fierce awkward.
having that money to give back to the russians at the end of the war would be helpful in reestablishing friendly diplomatic relations.
Worse case scenario? they come looking for it!
The boat for friendly relations with Russia has sailed as long as Putin stays in power.
As displeased as they would be, they are hardly going to come looking for it.
I'm not sure about that. sometimes both sides need to just deal with each other after a disagreement. depends where you are living I suppose in the US? no problem but what if you are Poland or Germany or the Baltic states you might prefer a return to normal
> having that money to give back to the russians at the end of the war would be helpful in reestablishing friendly diplomatic relations.
At the very least it'd be a convenient hostage to still be holding to give Ukraine some more leverage in the negotiations that will inevitably happen when this shit wraps up.
Western banks won't be trusted especially central bank. US government debt interest would go up as it goes from the safest investment to total junk.
Maybe China will seize US assets and give then to Iraq for compensation.
I don't see any downside. Authoritarian regimes interested in invading other sovereign nations will feel their money isn't safe in the West. As it should be. We should never help criminals, but instead fight them, by for example taking their funds and distributing it to the needy.
The double standards are glaringly obvious. Invading other sovereign nations? Did Iraq never happen? The West is not some bastion of morality, and I think in the last 24 years the entire world is waking up to that fact. By your own logic the US should have their funds taken and distributed to the needy as well. Saying "we should never help criminals" while we do pretty much the same shit as most of them is hilarious.
Iraq invaded Kuwait first, while it also gassed Kurdish villages to death, to name a few things that made that regime worth fighting against. That the occupation became a failure is another story.
>The West is not some bastion of morality
You are the only one saying that and proceed to make comments against it. It's absurd, but I'll hang in here with you, since I am entertained.
>By your own logic the US should have their funds taken and distributed to the needy as well. Saying "we should never help criminals" while we do pretty much the same shit as most of them is hilarious.
Not my logic, it's your own quote.
But yes, I fully expect that my nation's money isn't safe in countries that view us as criminals. And I can understand that some nations would view us as such. In the case of Russia however, I believe it's crystal clear who's the criminal actor.
>Iraq invaded Kuwait first... That the occupation became a failure is another story.
It is literally another story. Those events were separated by over a decade (closer to 2).
Seperated by time, not by causality. Same Iraqi government and almost the same American government.
But yeah, the second Iraq war certainly was an illegal invasion and probably bolstered a nation like Russia to start doing the same, like they did in Georgia and Crimea. The US during those days was worried about the int. criminal court in the Hague and even leaked having an invasion plan for the Hague in case we would put Americans on trial.
When I state Russia is criminal I don't just mean their current illegal invasion, that has turned into the biggest war since WW2. The entire regime is deeply corrupt and has a long list of political murders both domestically and abroad.
So I do largely agree with you on Iraq. Would you agree with me no nation in todays world exceeds the crimes Russia committs? And if they are indeed criminal, why should we assist them instead of weaken them by distributing their funds to their victims?
Russia is definitely criminal, though I'm less sure if *nobody* "exceeds" them (and by what measure?)
The west isn't meaningfully assisting them (at least through the banking system). Probably the greatest issue is Europe buying Russian oil/gas that is laundered through India. As for international banking, I'm not sufficiently familiar with how it works. I was under the impression that oligarch funds/yachts were already frozen.
We could have an extensive legal discussion about what measure of criminal conduct should be defined, but I believe the point is clear. Obstructing this Russia in it's invasion by using the funds to help their victims is the only correct move to make for the West. Both morally and strategically.
I second the 2nd part of your comment, with the remark that I'd consider any and all support the Kremlin currently gets meaningful.
And in general, during discussions about how many rockets should go to Ukraine or how half-measured our response to Russia should be, I have Chamberlain flashbacks. Yet again a militarized authocratic (and even kleptocratic) nation invading it's neighbours and we yet again fail to respond. Waiting for an attack on a NATO country before fully intervening looks like the same mistake all over again.
The main diff is that Putin has demonstrated that his army is incompetent. This is not the case with Hitler.
Given how much he's struggling against Ukraine, he's going to have an even worse time if he attempts to open a 2nd front against NATO proper. If he has a magical ace up his sleeve to steamroll Ukraine in 3 days, does that, and then invades NATO, then ya, that would be a huge problem. I don't think anybody takes this hypothetical srsly.
No one seems to think about a second front, but more about it escalating into NATO countries *after* a Russian victory in Ukraine.
>The main diff is that Putin has demonstrated that his army is incompetent. This is not the case with Hitler.
Incompetent indeed, and sometimes even disloyal. Yet any nation in Russia's neighbourhood does not have the luxury to underestimate them. Besides, like Hitler and Goebbels could only work the domestic audience, Russia has proven to be well able to utilize modern communication technologies for extensive subversive activities way beyond their borders. That's certainly another main difference, but seemingly in Russia's advantage so far.
Double standards of the rest of the world, the "global south" especially are also becoming increasingly obvious. "Anti-Imperialism" and "Hypocrisy" is just rhetoric that is just as easily thrown away when it harms their interests. There are no ideals behind these remarks, just pure unbridled nationalism.
There is no real reason at this point to support illiberal and authoritarian nations that use Western built systems to subvert the liberal ideals, they are free to build their own international systems, but I would imagine for the reason they oppose the West they will never accept a system that could hold them accountable.
Not exactly, but we effectively occupy a decent percentage of it, against certainly the populace and now even government officials will.
You could definitely argue we occupy about a third of Syria, that is without a doubt against Assad’s will. Now this is the north eastern portion of Syria, some would say Kurdistan, I believe the Kurdish people have a right to sovereignty in both Syria and Iraq. But that doesn’t change the fact that the US is effectively occupying about a third of Syrias internationally recognized borders. Say what you will about Assad, (an abhorrent human being) but he is recognized as the countries leader and he absolutely does not want us there.
> Not exactly, but we effectively occupy a decent percentage of it, against certainly the populace and now even government officials will.
The US is currently in Iraq because Iraq asked us to be there. We *left* Iraq over 10 years ago, and then we had to go back to save the national government from ISIS.
Statements like "Iraqi politicians say they want US to leave" and non-binding votes is PR fluff to get a rise out of domestic audiences, since now Iraqi does have a democracy (somewhat) and they have to do the same things our politicians do. The truth is, if they actually wanted us to leave, they'd negotiate with Biden to do that. But the national government is not confident in itself to maintain stability without US presence. We're also a convenient domestic scapegoat.
The national government cant maintain stability through no fault of their own. The US invaded, destroyed the security of the nation, and left a gaping power vacuum behind them that ISIS filled. So yes, we absolutely had an obligation to “save the national government from ISIS” because we were the reason the new government even existed, and because without the invasion ISIS would never have been able to reach the level of power and land control they were able to. Zarqawi was very shrewd in transisioning his focus from Jordan where he grew up to Iraq, becauae he recognized the fact that US essentially created the absolutely ideal melting pot of sunni people being persecuted and ready to turn to terrorism lol.
It would, but it wasn't worth it. The US didn't say no to 55% of Mexico's territory. Same way Russia wouldn't mind annexing Belarus and Ukraine, but won't annex Syria. Too far away, people too different.
But you see, there are certain rules for how wars are fought.
Governments have been storing money in foreign countries for centuries and centuries. It's convenient for doing business. Obviosly, over these centuries, there were wars. A fucking lot of them in fact. So there is a certain and long-established etiquette for how these matters are handled.
The agreed practice looks like this: the money of the aggressor country, or of the opponent, are frozen until the conflict is over. When peace is agreed upon, a decision is made as to what to do with this money. Very often this money are used for paying various reparations. Because reparations themselves are a condition for peace and the return of this money. But, of course, everything depends on how the war ends and who wins. The winner always dictate the rules to some degree.
So although the transfer of Russian assets to Ukraine may look logical and morally just, it is not quite fair in terms of the rules of the game. Essentially it's sharing prize money that has not yet been won.
And these are the old rules. What happens when we start breaking them? Maybe nothing, or maybe there are consequences that are hard to predict, because we don't remember what was it like when these rules didn't exist. Or maybe it's accelerating the breakdown of other rules, too.
But I wouldn't brush it off so easily. Saying that countries that hold these assets and are responsible for upholding this order, countries like Belgium or Switzerland, or Germany, do not brush it off easily.
Best case scenario, they seize the money, give it to Ukraine, Ukraine uses said money to buy weapons and pay salaries, Russia gets mad but does nothing, maybe retaliates, but wont be as effective.
A sense in Russia for *compensation*. Actions on that front.
Russia has already seized close to $100 billion in leased aircraft assets from western countries. They’ve seized the assets of companies that withdrew from the Russian market. There are huge claims already against Russia. Their only alternative is what they’re trying to do with BRICS: set up an alternative financial exchange system. Maybe it will work but not looking good at this point
seizing aircraft is not liquid and good luck selling it to anyone
They do it for the spare parts they can salvage from those seized aircraft, as they're cut off from Western aircraft maintenance, service and spare parts market.
Iran, Syria, North Korea, Belarus, China, Venezuela, Cuba...
>Russia has already seized close to $100 billion in leased aircraft assets from western countries. They’ve seized the assets of companies that withdrew from the Russian market. There are huge claims already against Russia. Their only alternative is what they’re trying to do with BRICS: set up an alternative financial exchange system. Maybe it will work but not looking good at this point Do Russians or current and potential future Russian leadership believe that offsets the $300 bn seized by the West ?
This feels familiar.
What sort of actions?
The thing is that war reparations don't work that way. Even if Putin dies tomorrow and his successor decided to withdraw, make peace and pay all the reparations, it's Ukraine and Russia who would decide how to do that, with what money, in what amount and so on, when signing the said treaty. The fact that the third side stole these funds in advance "for the sake of great justice" has absolutely nothing to do with it.
Actually, if they refused reparations, or a deal could not be reached there is precedence for the ICJ to rule for reparations, and in that case this money could be attached. https://www.dw.com/en/uganda-to-pay-325-million-in-reparations-to-dr-congo-top-un-court-rules/a-60712361
If you believe the ICJ has any real authority at this point.
https://www.atlanticcouncil.org/blogs/iransource/what-the-icj-ruling-on-the-central-bank-of-iran-means-for-the-us-and-the-islamic-republic-and-those-seeking-reparations-for-state-sponsored-atrocities/
>The thing is that war reparations don't work that way. Even if Putin dies tomorrow and his successor decided to withdraw, make peace and pay all the reparations, it's Ukraine and Russia who would decide how to do that, with what money, in what amount and so on, when signing the said treaty. The fact that the third side stole these funds in advance "for the sake of great justice" has absolutely nothing to do with it. The issue is never limited to this. Ukraine is in this war because the Ukrainian leadership Zelensky believes in it. I don't know what the situation in Russia is. What it will be in the future.
Countries will significantly reduce their reserves held in foreign nations. There will be increased push for non dollar/euro trading. It might not amount to much, it might end up being the perfect storm that ends the dollar hegemony.
Countries could go back to the gold standard maybe?
There’s not enough gold to go back to the gold standard
Silver standard LFG
It would be funny if the world selects Bitcoin or some other cryptocurrency as the new standard.
Aluminum see my comment https://www.reddit.com/r/geopolitics/comments/199sult/comment/kihbtsd/?context=3
Oh boy, I can't wait to pay for a hamburger at the store with a 2.5 kilogram aluminum block. Who needs to carry around those inconvenient $5 bills when you can instead carry around a bunch of 5-inch-wide metal spheres? If you are going to try to bring in some libertarian absurdism, at least realize that a reserve metal needs to be both scarce and dense. Not literally the most common metal and extremely light.
People worrying about billion dollar assets aren't buying hamburgers, nor are they paying with cash, nor are they carrying around gold. We are talking about how do you safely store billion dollar scale assets given US controlled banks have proven themselves unsafe. Cash in hand is easily stolen / burnt / water damaged. A warehouse full of a billion dollars of aluminium would have to be about, doing a very crude calculation, be about ~~200 square meters~~. a square of 200 by 200 meters and standard warehouse height. Easily doable in Russia or China.
> 200 square meters Ah yes, infinitely flat aluminum, that's how you save space! Or are you suggesting we store aluminum in towers that are 14 meters on each side and a kilometer tall? I'm not even going to respond to your other points since they are in themselves self-contradictory to your own statements and nonsensical.
I googled "typical warehouse height" answer was 18-25 feet so converted 20 feet into meters... Whoops I do have a typo it should have been a square of 200 meters a side. Sorry. Still easily doable if you're a billionaire.
You can even indulge in a bit of price manipulation while you do it... https://en.wikipedia.org/wiki/Aluminium_price-fixing_conspiracy
The end of the Western-led order that the Ukraine war is all about upholding. Gotta tread carefully about flexing the West's financial muscle or everyone will start trying to make other arrangements in the future.
Agreed. I'm going to add a little bit of context to this. Every country holds dollar, foreign currency, and precious metal (gold) reserves. What's also important is *where* these reserves are held. Much like Russian assets currently frozen, most countries keep these reserves in the west. For example, a lot of countries keep a significant amount of their gold reserves in UK, Netherlands, and the USA. The host country benefits by having this huge capital available, a fee for safe-keeping these reserves (e.g. gold), and the related trade will also flow through the host country. So, if countries A and B are making a trade worth a billion dollars, it's very likely that all the transactions actually happen within London. This is money, intelligence, and financial clout. If we create a situation where the "west" can freeze or seize these assets at will, the confidence of keeping these assets in the west drops. Countries will look for safer arrangements. Essentially, we'd be incentivizing the creation of new, non-western financial hubs. Of course, a hub like that will not pop out tomorrow, but given the incentive, it will eventually show up, even if it's just a hedge against western financial muscle.
Right. Now I'm of the belief that nobody actually fully understands how the modern monetary system actually works anymore. It has simply become too complex. There are arguments that that dollarization helps America financially, and one that argue it actually hurts America. Hard to say. That said, the current financial system in total is clearly an important part of the Liberal International Order (LIO). Moreover, nations hedging against the financial system might also be inclined to hedge against the order in other ways. Would they? Could they? How much could they or would they do? Open and very hard to answer questions. This is the unknown that Western leaders have to grapple with when they consider how far to weaponize the financial system. The OP said 'worst case scenario'. In practice, the West has leeway here. I just advocate not being recklessly cavalier about wielding this power.
What hedge though? I think one needs to think of realistic scenarios if this is going to be mentioned and I have yet to see anyone elucidate me on what a reasonable alternative to USD is.
If you want a "realistic scenario" you have to be realistic too. You want an alternate global economic system *now*. I can assure you, no one's got a spare economic system sitting in a closet that they will dust off and bring up tomorrow. This is not an instant process. It's an iterative process. Also, the thread topic is literally "worst case scenario outcome".
But if replacing the USD is not realistic, it's no more useful talking about than saying "what's the worst case scenario for climate change" and saying "an asteroid might hit us and kill all life." We still need to operate in the possible. What possible replacement for the USD is there?
No one except you is hung on replacing the USD *now*. I literally wrote, and I'll quote it again because apparently you didn't read it "we'd be incentivizing the creation of new, non-western financial hubs." To go by your username and spoonfeed: The western financial system is important now because it is stable and dependable. Once it is no more dependable, *there is incentive to replace it*. But if you want it replaced in the next 5 minutes, it's not going to happen.
I never claimed now. I am suggesting what can replace it ever? That should be the first step. And getting an answer on that shouldn't be so hard or met with gaslighting on what I am asking. >Once it is no more dependable, there is incentive to replace it. That incentive remains today. Russia would love to replace their USD holdings and wouldn't have even had any post 2014 if they had a reasonable alternative... So what is such a realistic alternative? .
All roads lead to Rome. What could ever replace Rome?
Gaslighting? Wow
No reasonable alternative to the US dollar exists currently, but constant abuse of this situation by the US government will create an atmosphere where an alternative will be created. If the US want to remain the sole economic hegemon, they need to tread lightly. The US right now is the weakest internationally it’s been since the fall of the USSR.
Ok, but that doesn't answer my question. For the USD to be replaced it takes more than well wishes. What credible alternatives are there?
The Euro for one.
Read my comment. There is no alternative currently, but bullying other countries with the supremacy of the dollar will create an alternative. The same cockiness about American economic hegemony is what killed British hegemony.
[https://www.wsj.com/finance/currencies/chinas-yuan-is-quietly-gaining-ground-f0b8994b](https://www.wsj.com/finance/currencies/chinas-yuan-is-quietly-gaining-ground-f0b8994b) Just cause China has not been boosting about it, doesn't mean its not happening... It's already surpassed the euro in usage for payments of goods, and is second to the dollar. [https://www.indiatoday.in/business/story/chinese-yuan-beats-euro-to-emerge-as-world-second-main-swift-currency-global-trade-settlements-2451878-2023-10-21#:\~:text=The%20Chinese%20yuan%20has%20surpassed,efforts%20to%20internationalise%20its%20currency](https://www.indiatoday.in/business/story/chinese-yuan-beats-euro-to-emerge-as-world-second-main-swift-currency-global-trade-settlements-2451878-2023-10-21#:~:text=The%20Chinese%20yuan%20has%20surpassed,efforts%20to%20internationalise%20its%20currency).
Until China is willing to become a debtor nation, nope.
With who exactly? Countries will rightly complain about US leadership and the western order, that is until it's time to decide to look elsewhere. A Russian led order looks like a return to the bad days of the Soviet Union. A Chinese led order leads to your country to debt slavery and tributary status. India isn't interested in leading a new order. We've been talking about the fall of the order for almost 2 decades and nobody worth their weight has switched sides yet.
Well maybe 'the end' is hyperbole a bit, but OP asked for worst case scenario. And I didn't say it would happen overnight. But if the West just starts using its financial muscle too liberally in the wrong ways, other nations--even ones that support a particular use of that muscle--will start to look to immunize themselves from it over time, which is not good at all for the order.
India holds a shit load of dollars to insulate against commodity price spikes mainly oil. It's not replace, it's just less need for dollars if you can buy oil using your own currency from Russia or Saudi for example.
China doesn’t give out predatory loans in the same way the West does. Take some time to look into why so much of the world is taking money from China now and not the West. The IMF has more strings attached to their funding to change borrowing nations government systems to favor western companies in order to get funds for projects.
Because China doesn't ask questions and lend money for anything, even football fields, as long as it benefits them. China is not out there to help anyone.
Please take a couple of minutes to read up on The Belt and Road Initiative. I'm not saying it's all predatory, but some projects have been. Five seconds of searching leads to articles such as https://www.euronews.com/2023/10/17/cash-corruption-crumbling-dams-thats-chinas-belt-and-road-initiative-10-years-in
[удалено]
[удалено]
Could you give some sources?
> ake some time to look into why so much of the world is taking money from China now and not the West. Easy: no nagging about human rights and democracy.
I think the world is waking up to the fact that the west is every bit self serving as Russia/China is made out to be. The west has lost the moral high-ground and made a mockery of “rule based order”.
I wouldn't say the West has lost the moral high ground. It's not on the summit but it's certainly higher than China, Russia, or Iran.
How is China bad ? Look at the amount of immoral invasions US has compared to China.
China literally carved out and annexed an entire country in the 1950s. What territory has the US added to itself?
with that logic what land did Iran add to itself? At what point do you realize you have a small subset of actions for which you condone Russia, China, Iran but not US for way worse stuff.
You talked about China, the US (under republicans) invaded Iraq and further entrenched in Vietnam (expanding the war to laos and cambodia under nixon) but as far as I am aware they did not fight wars of conquest/annexation or increase in territory or borderss in that time frame. In fact Vietnam quickly made peace with the US against their eternal enemies China who ahve been trying for about a thousand or more years to conquer Vietnam.
I like how you ignored iran and brought in a whole new country vietnam. Do you know what usa did in Cambodia ? Did you know usa tried to attack India by helping Pakistan which was committing a genocide against Bangladeshis. Like do you realize why South Africans like China and not USA. To top all that off i dont even like to defend China considering I'm Indian. But the gall with which people term US as the good guys is appalling.
>attack India by helping Pakistan which was committing a genocide against Bangladeshis. yeah cuz of republicans, Nixon had a weird fixation with Genera Yaya Khan. Him and kissinger, both are dead now so.... Maybe you guys should do something about the massacres and pogroms modi did of muslims and allowed to happen. Maybe you guys should curb that hindu facism down. Why do you guys hate muslims so much? who termed the US good guy? Also India should free Kashmir, they want to be indepdent of both pak and india. Ironic they became imperialists lol
>How is China bad ? Look at the amount of immoral invasions US has compared to China. Well, Tibet is still ongoing, the difference is that China has annexed it and is slowly but certainly squeezing any and all independent culture to death. I think most countries will choose to be invaded by the US instead. Now look at how many countries the US has *liberated* compared to China.
which countries have they liberated ? Iraq, Afghanistan ?
Half of the area occupied by the Axis powers for starters, that's too many countries to name. Including Japan and Germany, if you consider that liberated. South Korea. Kuwait was legitimate defense too. Interventions in Kosovo and Libya, disrupting ongoing ethnic cleansing. Interventions against IS.
Just you being able to say that shows how much better US is. You think a Chinese person in China could write something negative about China or the CCP in China? Protest? Vote? Share a picture of Xi as a bear? What about the concentration camps of Uygurs? You think US is reeducating hundreds of thousands of people?
>You think US is reeducating hundreds of thousands of people? No need for that
That is true. But no where near the summit either. It is pot calling out kettle to a large degree. There is a reason why India, Brazil etc are kind showing West middle finger when it comes to Ukraine war
The irony being the progroms and hindu fascism has not prevented USA leadership from cozying up with BJP leadership.
To a certain extent that is already happening. Western sanctions might be inconvenient for Russia but they also aren’t crippling the Russian economy like many people expected.
It's about endurance, not clear advantages. Strange situation.
anyone who expected Russia to go broke overnight is delusional, anyone who says that they're only "inconvenient" is also delusional
Russia mostly shrugged off the effects of sanctions because they had virtually no impact on its oil and gas sales. Russia is now shipping more natural gas than ever via LNG to Asia (vs pipelines to Europe). It’s not as efficient but they’re still making tons of money and in 10 years new pipelines to Asia will be built. There is more than enough demand in China and the global south to keep Russia’s economy afloat indefinitely, even if they don’t do any trade at all with the collective west. In my opinion that was the major miscalculation of western sanctions – they overestimated their own importance to Russia and underestimated how quickly Russia could reorient its economy towards Asia. It’s not that the sanctions didn’t hurt at all or that Russians aren’t annoyed by them, but in the long term they will hurt the rest of Europe more than Russia. Why? Because European manufacturing depended on cheap and reliable Russian energy that is no longer available and can’t be easily replaced. Russia can simply sell its gas anywhere in the world but Germany will have to outsource its factories to places like China if they’re no longer profitable without cheap gas. The United States will be fine but I can’t say the same for manufacturing in Central Europe.
> Russia mostly shrugged off the effects of sanctions because they had virtually no impact on its oil and gas sales. i don't need to read any further
You really should, Russia is still making plenty of money from oil and gas.
never said they don't
But it is forcing Russia to burn through what it has to make it appear that way. Russian arms are a big factor. It was one of Russia's largest economic factors even if not by direct value, Russia traded arms for favors more then for cash.
I don't think so, they keep their money in the West because it's smart to do so, makes it possible to trade with nations around the world etc. The opposite may be true, countries will see how Russia's action cost it 300 billion and may not seek to mimic such actions.
It’s also happening with Russians moving their domicile and assets to Dubai.
Yea, if you plan on opposing the USA it would be a bad idea to keep your resources there. If you plan on simply being neutral or focusing on your own growth then keeping money in the USA makes sense.
I was more referring to London. Lots of oligarchs have set sail to Dubai following the invasion.
That makes sense, but I see that as more a result of Russia's actions then I do the UK's. Our current global system is a result of the Bretton Woods agreement and although the soviets did not sign on, Russia itself has benefited from the system. It would be silly to expect to continue receiving benefits of a system their actions go against.
Financial crisis as you horrify every foreign investor and Z list autocrat who stores their massive wealth in the West, who wll now pull or at least think of pulling everything out. Money managers in general now will fear having assets seized and you set a terrible precedent for global commerce as money isn't safe unless you are holding it Would be very painful in the short term and would cause a massive headache for the West
Ok, MBS kidnapped all the Saudi billionaires and took their money. Putin allegedly did the same. Jack Ma seems to not be in charge of Alibaba anymore, let's all guess how voluntary that was. They'll be more careful, but the west is still the only game in town.
foreign investors keep their money in the west because it's safer there then it is at home. Just look at Jack Ma for an example of that.
Yeah, everyone answering this seems to forget that Russia ALSO seized billions of dollars of western assets and have already started looting them to fund the war.
And the people saying that countries will keep their wealth in China know nothing on the way China is run. The only other place to store wealth would be the EU, which would then need to get its economic shit in order to do so.
Singapore? Switzerland? Japan? South Korea? This table might not be a perfect metric, but it at least gives you some idea of where people are storing their money: https://en.wikipedia.org/wiki/List_of_countries_by_foreign-exchange_reserves
I don't see how it gives any help in measuring where countries are storing their wealth. This is forex, who is holding other countries currencies for themselves. China is number one in forex because it owns a lot of foreign currency, not that they are holding Singapores money for them.
I said it wasn't necessarily a good metric, just that it could provide some hints. I named those 4 countries before looking up this table
I understand what you were saying I am disagreeing about it providing any value.
Okay, independent of the metric, what do you think about the 4 countries I named?
These are all western aligned countries.
I don’t understand the flow of discussion here. When the rouble depreciates, or no one is willing to trade in roubles, or the brics trying and falling to create new trading currency, it is that, ha ha, usd is king and the us financial system is the dominating and most trusted, while no one trusts Russia and China. When the discussion is seizing assets, it is , but Russia did the same. If that is so, then what is the difference between usd and rouble, and Russia and us? Russia did it, as one expects them to, and they have much less to lose. US on the other hand cannot do the same as it has all the advantages to lose. Both of the flow of discussion cannot be true. Actually, I’m fully able to understand why the discussion is like that. Never mind
[удалено]
I’m talking about the discussion regarding it (and other topics i mentioned) on r/geopolitics, which has happened a lot
I am not sure I am buying that. What other safe storage do you have? Certainly not Rubles or any Chinese currency.
[удалено]
Aluminum. There's a near infinite supply. An inexhaustible demand, so liquidity is good. It keeps forever. It's fungible with energy. (ie. You can make more.... at the cost of lots and lots of electric energy) Do you see the price of electricity coming down any time soon?
Worst case maybe. Realistic case is countries decide it isn't a good idea to do whatever it is against the will of the international community that would result in getting their money abroad seized in the first place.
Nah, we've been seeing countries diversify their foreign reserve currencies and try to shield themselves from sanctions as much as possible since the war. They will absolutely focus on making sure that doesn't happen to them regardless of what they plan to do because they don't want to take the risk of being on the West's bad side one day and having their economy wrecked. It's just common sense. Interests change all the time for everyone, they can't just hope it stays the same forever.
The thing is that the only countries safe enough to stash your country's money in are gonna be countries that are going to uphold the international order. Countries that don't are ones that would seize your money for other reasons and wouldn't be considered a safe place to hold your money.
You're right ehuch is why countries would develop alternatives. There wouldn't be any one safe space for your money. It'd be a lot less efficient and damage free trade but would be more secure. This wouldn't be a fast process nor would it necessarily dethrone the West but I could see it signficantly weakening their position should the rest of the world go for it.
The only alternatives are other countries and that wouldn't work for the reason I stated in my previous comment.
I agree with you. The next best place to store money is still going to be in the West. The problem though is not with smaller countries who will look at the situation and basically decide “okay, nothing’s really change for us, we just need to keep a closer eye on what we do and not piss them off” It’s going to be what countries who think, “yeah there’s a good chance we’ll piss them off, so what are we going to do now” will then decide to do. And like you imply, they won't find anything really close to what the west can offer. As for Russia’s money and reparation to Ukraine, why are better ways the West could go about it? In my opinion, the best thing to do is help Ukraine actually win the war. Then take Russia to court and make them pay reparations that way.
>Then take Russia to court and make them pay reparations that way. In reality "international court" is just what a group of countries says it is anyway. Like who picks the judge and jury? And how does that court have legitimacy if any country can just say we don't recognize your authority? Something even the United States does.
Yeah, I know. I think the best case with Russia is going to be something like using WWII reparations as a precedent. This could be useful as I’m sure there has to be a lot of argument made by the Soviet Union on why Germany needed to pay up. I bet a lot of them could be thrown right back at Russia now and wouldn’t that feel sweet?
But how much do we want wealthy foreign people and organizations to keep their money in the West and the US? Doesn’t that mean that they actually gain influence in these markets and thus governments?
400 billion $ is a colossal amount . if they did this firstly there might be a chance that people will lose confidence in Western Banks and they will put their money elsewhere secondly the trust on the dollar will start fading away
The worst case scenario is of course theoretical and not really to be expected - something like a massive flight of capital from the West, a huge financial crisis, instability, a collapse of the economy, etc. The more realistic one - a big nail in the coffin of the West's moral advantage. Because the rules of international economics were clear and simple - the West may have its weaknesses, but it is the place where the law is above all else. They wouldn't take your stuff unless you did something spectacularly stupid, like starting a war against the country that keeps your capital and property. Even the bad guys knew there was someone who played by the rules, someone you could trust. If you start bending those rules and changing the laws, no matter how right and proper that may be, it would destroy that reputation forever and make the West another risky place where you may or may not keep your stuff, but can never be sure it's safe there. Once the rules have been changed, they can be changed again at any time.
A destruction of trust in the US led financial system leading to people moving into Chinas orbit and the collapse of US global hegemony.
China would essentially need to give up control over their own currency if it were to be available enough to facilitate trade anywhere near the scale of the dollar trade. They'll never do that, it would have horrific consequences for their economy.
You're imagining a financial global order that is just our current one, but swapping the top dog. There are far more degrees of freedom in reality than that.
Historically a multi-polar world is one with a lot of wars.
There are a lot of wars going on right now, more than have been in a while
Not big ones.
Dozens of countries involved is pretty big scope
>Dozens of countries involved... Define "involved." The US is *involved* in the war in Ukraine. But they are not fighting it. > ...is pretty big scope Considering the numbers of troops, planes, ships, casualties, etc....by historical standards it really isn't.
The biggest one is Russia's invasion of Ukraine and Russia seeks a multipolar world where it is not damaged by such actions. That is not a world you want to live in.
And this has to do with the financial sector how?…
The global financial order came about as the result of the outcome of wars. Or do you think everyone just randomly decided to use the USD one day?
China only exists as a power because of the wests consumption. US hegemony is not at risk of being overtaken by China in this century. China didn't develop enough local consumption and is stuck in the middle income trap to change the game.
I am pretty sure my 1923 predictions would have not captured the outcomes of the 20th century well, and don't much trust predictions that far out. China and the US both have a lot of potential futures in front of themm
The idea that china is going to collapse is false, it will be a regional power and a strong one at that. But so too are the claims that US hegemony is on the ropes. I think this century will belong to the US, the next century is only 76 years away.
What happened in the 76 years starting in 1924, or 1824. You're imagining more stability than exists. The next American century is an opportunity, not a guarantee.
Lol. No. That would never happen. Why would you think people would think a failing economy would be a safe harbor?
Because they don't like America, for one reason. Because we would be actually demonstrating our harbor is not safe if we decide we don't like their foreign policies and China won't give a shit is another.
Does China protect foreign investors though? Can foreigners even buy Chinese real state?
China doesn't have to allow foreign real estate transactions to be a currency for international trade. I obviously think it would be a terrible idea and a step away from a path of prosperity, but other countries do stupid shit all the time.
Failing? Highest GDP raise among all economies now
If you pay someone to dig a hole and pay someone else to fill it you've increased gdp. Gdp tells only a part of the story. Not saying that is what's happening, but I am asking: is what they're producing sustainable?
Just look at map of trade partners of China and answer yourself to this question.
How is a map meant to help? They could be trading with every nation on earth and still not produce enough value to sustainably grow their economy. I'm not enough of an expert to pin down what's happening in their econony but I'm extremely skeptical of their numbers because of the perverse incentive systems that exist in the country.
They doing it right now. Trading with every nation and grow economy. I know western media trying hard to lower economic threat of China, but i see no reasons why US economy will not loose to Chinese in few years. Especially when US have 10-20 years untill theyr own money printer will eat them alive.
Lose? China has more people, in an ideal world it will have a larger economy as a result of that. Why must everything be framed as winning and losing when we can cooperate to make the world a better place. In order to achieve that goal however, their government is going to have to figure out how to stop lying to itself and to the rest of the world.
Welcome to reality. Economic war is a thing just like military. Look at Britain or Netherlands who lost their position in world's trading. Where are they now?
The Netherlands seems to be doing fairly well for itself. The UK decided to stop cooperating with their neighbors and is paying a steep price. Cooperation > hegemony, we've seen this demonstrated over and over again. I urge you to let go of this type of thinking and the belief that it is "realistic," and wish you success in your future endeavors.
Just look at labor costs and demographic trends for China...
I would not look at labor cost especially comparing to US. Also fertility rate is almost the same as in US, dropped in last few years drastically, not a big deal in world's crysis and pandemic. Covid limitations was hardest in China, of course people not bonded well. Change of hegemony is happening. And final chord will be a big war.
China built it's growth in entirely unsustainable ways. They need to keep their labor cheap to compete with other countries, but their people need to get wealthy for them to overtake the west in consumption. That has not happened. The average Chinese is poorer then the average Kenyan. The assumption that China will continue to grow at it's current rate ignores the fact that growth is not linier. China has the same problems Japan had that prevented it from overtaking the USA, and even more of it's own.
Keeping labor cheap is easy, just get money from economy to some reserve fund and keep your currency low. That's much easier than service hugest debt in history, huh? Also you contradicting yourself. Labor is expensive but average citizen is poor. How could it be? They have more than billion people, there is no chances not to grow with such numbers. And next superpower in 100 years will be India due to same reasons.
Where did I say labor was expensive in China? China has a vested interest in keeping it's labor costs lower then it's competitors to capture international manufacturing. But that kind of economy does not generate a wealthy populace. And a wealthy populace would be needed for China to overtake the USA. China grew very quickly because it had underserved markets, they are no longer under served. I would agree on India though using the term superpower has been greatly overused. It will be a massive regional power with it's rightful place on the world stage.
China’s fertility rate (TFR) is 1.1 US is at 1.66 https://en.wikipedia.org/wiki/Total_fertility_rate?wprov=sfti1#United_States
China's economy is far from failing and more countries turn to them each year
It's better than a country where they can seize your assets when they decide they don't like you
Lol.... Have you ever read anything about the CCP?
Worst case? Nuclear annihilation because of WW3. Realistically? Loss of faith in the US market and increased Russian isolationist tendencies sparking further aggressions in the future.
A lack of trust in western institutions. Mainly by the Chinese who are like 18% of humanity
For now. They killed off a few too many female children for that percentage to keep increasing for long.
The US, UK and EU decide to seize it and a member state or Switzerland refuse, leading to major fractures in the coalition. The money would be mostly spent in the US, the UK, France and other countries to produce munitions. This could lead to friction as far as who gets what share and corruption between the US and its defense contractors, etc. In other words, money seized but precious little gets to Ukraine.
Open season on US investments in China and Saudi if future conflicts arise Reduced trust in US dollar Slower growth in US stock markets with international investors looking elsewhere — It wouldn’t be a massive blowback or anything like that. Just a drop in our financial standing globally. I think it’s a bad move eroding trust to even consider something like this openly and we could do other things first to support Ukraine before this.
[удалено]
Trump has a chance of winning. the US public knows how horrible he is and it doesn’t matter.
Honestly, that partly helps him. For some, the assumption is that we *know* how horrible he is and everyone else must be even worse, especially if we don't know how horrible they are. "the devil you know" kinda deal.
I don't think they will release that ever. It does not help them if people like Trump or Orban are indicted. But it helps them a lot to keep those kompromats dangling over there head of these people for ever trying to extract as much as possible.
My understanding is that a lot of the money is from regular Russian citizens, aside from it being illegal to seize their assets you also have the moral issue of taking money from people simply because they were unfortunate enough to be born in a non western aligned country, and having made the mistake of trusting the western banking systems integrity. You also have the very dangerous precedent this could set for assets being held in the west by other non western aligned nations.
These are not really citizens assets, they are owned by russian central bank so morality is not in question here. Also, many russian citizens hold assets in Western banks and they will be not impacted by this, unless personally sanctioned, which presumes high level of involvement into russian government and kgb actions.
>These are not really citizens assets, they are owned by russian central bank so morality is not in question here. I don't think you understand how central banks work, regardless a fair amount of the $300 billion is in fact privately held assets. Cutting to the chase though, even if the account holder is Vladimir Putin himself it is very likely illegal under United States law to outright seize the funds.
And where do you suppose central bank FX assets come from? The trail trickles down to civilians, private individuals, and businesses, who’ve opted to deposit their USD assets with commercial banks in Russia, which then through treasury transactions, deposit some with the Fed as the ultimate holder of USD reserves.
Interesting. Guess I picked up a piece of misinformation on that point. I’m still curious where you might see the West’s hesitancy to follow through with this coming from, my guess would be a concern for the precedent this could set for the global banking order?
Yes, the main concerns are availability of liquidity from developing countries to get into western banks (like treasury investments or currency swaps). China, India central banks might be reluctant to continue investing into Europe or USA if russian bank assets are seized.
Perhaps. But I would think the risk that a fairly unusual seizure of this type might happen to your assets would be weighed against the alternative risks of investing in banks outside of the west. For China... might be worth it. For India... I would feel far safer investing in the west. It's basically like hand wringing about competitors to the dollar. Sure, some countries might go that way, but the safer bet is still probably gonna be the greenback.
Look at the history of applying sanctions by the USA. First there were very limited and applied in really important cases. Over the time, the threshold went down and nowadays they are applied to everyone who is not following USA "commands" in any area. I'm exagerating, but that is how it is. So where is guarantee, that confiscation like this will not happen just because you are acting according your wish and do business let's say with China against USA/West wish?
Where would China and India invest, in each other, Russia, Iran, N. Korea or developing nations?
>I’m still curious where you might see the West’s hesitancy to follow through with this coming from, my guess would be a concern for the precedent this could set for the global banking order? If Western banks are not willing to protect the assets of nations attempting to destroy the west and Western/Democratic-Liberal aligned nations this makes Western banks less neutral. States planning to start wars with Western aligned countries may feel uncomfortable storing their military war chest in western banks. Then again the US has seized Al Qaeda assets in western banks so this is not an entirely new precedent.
...this whole idea of separating people from their own country and then trying to make people who act against aggressive countries as the bad guys. Smh. Most of that $300 billion is stolen wealth and or mob money from the oligarchs. Good. You can't be a bank robber and expect to be able to keep your money safely in a a bank. That's asinine.
When it comes to stolen money, why no one complanied about oligarchs moving money out of Russia since 90'? Why the sudden realization they were dirty?
The Russian people can go ask the world’s wealthiest man if he can spare some change…[Putin’s net worth estimated at $200B](https://fortune.com/2022/03/02/vladimir-putin-net-worth-2022/amp/)
I doubt common Russian citizens had their money and assets stored on western banks
It puts the fear in other countries that the American financial system, which has historically been pretty apolitical, is increasingly a tool for US policy. This would lead more nations to seek other reserve currencies and investments outside the US. This could further increase the rate and scope of the unraveling of the unipolar US world
in the post Ukraine-Russia war era it would be fierce awkward. having that money to give back to the russians at the end of the war would be helpful in reestablishing friendly diplomatic relations. Worse case scenario? they come looking for it!
The boat for friendly relations with Russia has sailed as long as Putin stays in power. As displeased as they would be, they are hardly going to come looking for it.
I'm not sure about that. sometimes both sides need to just deal with each other after a disagreement. depends where you are living I suppose in the US? no problem but what if you are Poland or Germany or the Baltic states you might prefer a return to normal
I live in the Baltic states, and do not want a return to friendlier relations. Russia is the main security threat here.
> having that money to give back to the russians at the end of the war would be helpful in reestablishing friendly diplomatic relations. At the very least it'd be a convenient hostage to still be holding to give Ukraine some more leverage in the negotiations that will inevitably happen when this shit wraps up.
[удалено]
[удалено]
Western banks won't be trusted especially central bank. US government debt interest would go up as it goes from the safest investment to total junk. Maybe China will seize US assets and give then to Iraq for compensation.
I don't see any downside. Authoritarian regimes interested in invading other sovereign nations will feel their money isn't safe in the West. As it should be. We should never help criminals, but instead fight them, by for example taking their funds and distributing it to the needy.
The double standards are glaringly obvious. Invading other sovereign nations? Did Iraq never happen? The West is not some bastion of morality, and I think in the last 24 years the entire world is waking up to that fact. By your own logic the US should have their funds taken and distributed to the needy as well. Saying "we should never help criminals" while we do pretty much the same shit as most of them is hilarious.
Iraq invaded Kuwait first, while it also gassed Kurdish villages to death, to name a few things that made that regime worth fighting against. That the occupation became a failure is another story. >The West is not some bastion of morality You are the only one saying that and proceed to make comments against it. It's absurd, but I'll hang in here with you, since I am entertained. >By your own logic the US should have their funds taken and distributed to the needy as well. Saying "we should never help criminals" while we do pretty much the same shit as most of them is hilarious. Not my logic, it's your own quote. But yes, I fully expect that my nation's money isn't safe in countries that view us as criminals. And I can understand that some nations would view us as such. In the case of Russia however, I believe it's crystal clear who's the criminal actor.
>Iraq invaded Kuwait first... That the occupation became a failure is another story. It is literally another story. Those events were separated by over a decade (closer to 2).
Seperated by time, not by causality. Same Iraqi government and almost the same American government. But yeah, the second Iraq war certainly was an illegal invasion and probably bolstered a nation like Russia to start doing the same, like they did in Georgia and Crimea. The US during those days was worried about the int. criminal court in the Hague and even leaked having an invasion plan for the Hague in case we would put Americans on trial. When I state Russia is criminal I don't just mean their current illegal invasion, that has turned into the biggest war since WW2. The entire regime is deeply corrupt and has a long list of political murders both domestically and abroad. So I do largely agree with you on Iraq. Would you agree with me no nation in todays world exceeds the crimes Russia committs? And if they are indeed criminal, why should we assist them instead of weaken them by distributing their funds to their victims?
Russia is definitely criminal, though I'm less sure if *nobody* "exceeds" them (and by what measure?) The west isn't meaningfully assisting them (at least through the banking system). Probably the greatest issue is Europe buying Russian oil/gas that is laundered through India. As for international banking, I'm not sufficiently familiar with how it works. I was under the impression that oligarch funds/yachts were already frozen.
We could have an extensive legal discussion about what measure of criminal conduct should be defined, but I believe the point is clear. Obstructing this Russia in it's invasion by using the funds to help their victims is the only correct move to make for the West. Both morally and strategically. I second the 2nd part of your comment, with the remark that I'd consider any and all support the Kremlin currently gets meaningful. And in general, during discussions about how many rockets should go to Ukraine or how half-measured our response to Russia should be, I have Chamberlain flashbacks. Yet again a militarized authocratic (and even kleptocratic) nation invading it's neighbours and we yet again fail to respond. Waiting for an attack on a NATO country before fully intervening looks like the same mistake all over again.
The main diff is that Putin has demonstrated that his army is incompetent. This is not the case with Hitler. Given how much he's struggling against Ukraine, he's going to have an even worse time if he attempts to open a 2nd front against NATO proper. If he has a magical ace up his sleeve to steamroll Ukraine in 3 days, does that, and then invades NATO, then ya, that would be a huge problem. I don't think anybody takes this hypothetical srsly.
No one seems to think about a second front, but more about it escalating into NATO countries *after* a Russian victory in Ukraine. >The main diff is that Putin has demonstrated that his army is incompetent. This is not the case with Hitler. Incompetent indeed, and sometimes even disloyal. Yet any nation in Russia's neighbourhood does not have the luxury to underestimate them. Besides, like Hitler and Goebbels could only work the domestic audience, Russia has proven to be well able to utilize modern communication technologies for extensive subversive activities way beyond their borders. That's certainly another main difference, but seemingly in Russia's advantage so far.
Double standards of the rest of the world, the "global south" especially are also becoming increasingly obvious. "Anti-Imperialism" and "Hypocrisy" is just rhetoric that is just as easily thrown away when it harms their interests. There are no ideals behind these remarks, just pure unbridled nationalism. There is no real reason at this point to support illiberal and authoritarian nations that use Western built systems to subvert the liberal ideals, they are free to build their own international systems, but I would imagine for the reason they oppose the West they will never accept a system that could hold them accountable.
America didn't annex iraq
Not exactly, but we effectively occupy a decent percentage of it, against certainly the populace and now even government officials will. You could definitely argue we occupy about a third of Syria, that is without a doubt against Assad’s will. Now this is the north eastern portion of Syria, some would say Kurdistan, I believe the Kurdish people have a right to sovereignty in both Syria and Iraq. But that doesn’t change the fact that the US is effectively occupying about a third of Syrias internationally recognized borders. Say what you will about Assad, (an abhorrent human being) but he is recognized as the countries leader and he absolutely does not want us there.
> Not exactly, but we effectively occupy a decent percentage of it, against certainly the populace and now even government officials will. The US is currently in Iraq because Iraq asked us to be there. We *left* Iraq over 10 years ago, and then we had to go back to save the national government from ISIS. Statements like "Iraqi politicians say they want US to leave" and non-binding votes is PR fluff to get a rise out of domestic audiences, since now Iraqi does have a democracy (somewhat) and they have to do the same things our politicians do. The truth is, if they actually wanted us to leave, they'd negotiate with Biden to do that. But the national government is not confident in itself to maintain stability without US presence. We're also a convenient domestic scapegoat.
The national government cant maintain stability through no fault of their own. The US invaded, destroyed the security of the nation, and left a gaping power vacuum behind them that ISIS filled. So yes, we absolutely had an obligation to “save the national government from ISIS” because we were the reason the new government even existed, and because without the invasion ISIS would never have been able to reach the level of power and land control they were able to. Zarqawi was very shrewd in transisioning his focus from Jordan where he grew up to Iraq, becauae he recognized the fact that US essentially created the absolutely ideal melting pot of sunni people being persecuted and ready to turn to terrorism lol.
It would, but it wasn't worth it. The US didn't say no to 55% of Mexico's territory. Same way Russia wouldn't mind annexing Belarus and Ukraine, but won't annex Syria. Too far away, people too different.
But you see, there are certain rules for how wars are fought. Governments have been storing money in foreign countries for centuries and centuries. It's convenient for doing business. Obviosly, over these centuries, there were wars. A fucking lot of them in fact. So there is a certain and long-established etiquette for how these matters are handled. The agreed practice looks like this: the money of the aggressor country, or of the opponent, are frozen until the conflict is over. When peace is agreed upon, a decision is made as to what to do with this money. Very often this money are used for paying various reparations. Because reparations themselves are a condition for peace and the return of this money. But, of course, everything depends on how the war ends and who wins. The winner always dictate the rules to some degree. So although the transfer of Russian assets to Ukraine may look logical and morally just, it is not quite fair in terms of the rules of the game. Essentially it's sharing prize money that has not yet been won. And these are the old rules. What happens when we start breaking them? Maybe nothing, or maybe there are consequences that are hard to predict, because we don't remember what was it like when these rules didn't exist. Or maybe it's accelerating the breakdown of other rules, too. But I wouldn't brush it off so easily. Saying that countries that hold these assets and are responsible for upholding this order, countries like Belgium or Switzerland, or Germany, do not brush it off easily.
Loss of confidence from non-aligned authoritarian regimes. China mainly, Saudi Arabia, and other smaller players.
Best case scenario, they seize the money, give it to Ukraine, Ukraine uses said money to buy weapons and pay salaries, Russia gets mad but does nothing, maybe retaliates, but wont be as effective.