It’s possible to call this theft you know
Not that we would make such an accusation against one so eminent as our own Foreign Secretary:
However, a more radical option is now being considered that could solve Europe’s rearmament crisis overnight.
David Lammy, the Foreign Secretary, spelt out the argument to MPs this week: “Europe has to act quickly, and I believe we should move from freezing assets to seizing assets.”
Such a move would allow the West to turbocharge defence spending by granting access to $300bn (£233bn) of frozen Russian assets, including foreign currency, gold and Kremlin bonds.
Unsurprisingly, campaigners have thrown their weight behind the idea.
As the Telegraph’s headline makes plain there’s a certain difficulty with this:
….but seizing it will chill the City
Well, yes, it would. Markets of any sort, let alone financial markets, depend upon that idea of the rule of law. Property rights - including the idea that the government cannot just lift property off someone because. It’s possible to go further and insist that civil liberty depends upon government not being able to do that - the American Constitution certainly thinks so. That the property to be lifted belongs to some J Foreigner is not a comfort to a global financial market for everything belongs to some J Foreigner to one government or another.
Yes, yes, we agree, war is different, Russia etc. And yet adopting Russia’s tactics used against Yukos to trumpet the paramountcy of our version of civilisation does look odd.
We’ve even the Stiglitz test to consider here:
Europe’s powerful tool against Russia? Seizing its frozen assets
Recall that the Stiglitz test is a negative one. We’re particularly taken by these two snippets:
Whatever the case, Trump rejects the very idea of the rule of law because he subordinates it to political interest: the law should be used when it serves the president’s interests and ignored when it does not. Agreements between countries (even those he signed) can be broken at will.
….
We previously argued that these assets should be used to fund Ukraine’s reconstruction, since the damage caused by Russian aggression far exceeds $220bn. But the money is needed even more urgently now. One cannot rebuild a country that is still under attack and partial occupation. Justice and common sense dictate that these resources go to fund Ukraine’s defence. Europe can use whatever legal manoeuvres it needs;
We read that as the rule of law is very important when violated by Orange Man Bad but a mere matter of expediency when we propose to violate it.
Now, yes, this is all very difficult and something must be done and so on. We’re reminded of that drama:
“Oh? And when the last law was down, and the Devil turned 'round on you, where would you hide, Roper, the laws all being flat? This country is planted thick with laws, from coast to coast, Man's laws, not God's! And if you cut them down, and you're just the man to do it, do you really think you could stand upright in the winds that would blow then? Yes, I'd give the Devil benefit of law, for my own safety's sake!”
There is indeed a very nice pot of other peoples’ money there and very good use could be made of it too. Allowing our government(s) to help themselves to nice pots of other peoples’ money because they could make good use of it seems to us suboptimal for the long term health of the rule of law and our economy.
Theft is probably too strong a word to use here but it is a possible one.
Tim Worstall