Seizing Russian reserves is the right thing to do

Unlock the Editor’s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. The writer is the author of ‘When nations can’t default: A history of war reparations and sovereign debt’ Of the potential geopolitical flashpoints in 2024, one for investors to watch may be the pressure to seize Russia’s reserves in foreign central banks to fund Ukraine. Western nations were reported last month to have been actively exploring the move as political resistance in the US and elsewhere grows to increasing direct financial support to Ukraine in its fight against invading Russia. Seizing the assets has raised worries about the consequences for the financial system, namely that some countries such as China might come to fear that reserves held in euros or dollars were no longer safe. But they shouldn’t. If countries don’t illegally invade other countries, their money is quite safe.   The EU and the US should take Russia’s frozen assets and give them to Ukraine. It is the right thing to do and there are historical precedents for both confiscating foreign assets during a time of war and allocating war reparations claims after. A classic problem of sovereign finances is...