Saudi Arabia warned it could sell some European debt in response to a move by the G-7 to freeze about $300 billion in Russian assets. Reports By Bloomberg.

The veiled threat was delivered earlier this year by Saudi Arabia’s finance ministry to some G-7 counterparts, as the group weighed seizing Russian assets meant to aid Ukraine.

According to Bloomberg, Saudi Arabia specifically pointed to the euro loan issued by France.

Riyadh has for months been concerned about Western efforts to seize Kremlin assets. In April, Politico Reported that Saudi Arabia, along with China and Indonesia, was privately lobbying the EU against sequestration.

But Saudi Arabia’s threat to write off the debt of EU members would represent a serious show of strength and willingness by the kingdom to use its economic power to sway Western policymakers.

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In June, the G-7, which includes the United States. Canada; United Kingdom; France; Germany; Italy; And Japan agreed to issue $50 billion in loans to Ukraine that would be financed by profits from Russian assets. The move stalled after the West fully seized about $322 billion in frozen Russian central bank assets.

Bloomberg said Saudi Arabia’s warning is likely to fuel opposition to a more forceful approach among some EU member states, despite the United States and Britain lobbying for an outright takeover.

Russia-Saudi relations in the spotlight

Saudi Arabia’s threat underscores concerns among wealthy Gulf states that the West could one day apply the same economic levers it has used if criticism of human rights issues in the Gulf or criticism of their foreign policy decisions resurfaces. against Russia over the overseas assets of the Gulf powers.

Russian President Vladimir Putin has welcomed Saudi Arabia, as he relies on the oil-rich kingdom to counter Moscow’s isolation on the global stage and strengthen energy markets.

Putin made a rare visit to Saudi Arabia and the United Arab Emirates in December.

Yemen Houthimissiles September2022 AFP 0.jpg

US officials fear that Israeli attacks on Hezbollah could drag Russia down.

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Middle East Eye Reported that Putin sought permission from Crown Prince Mohammed bin Salman before arming Houthi rebels in Yemen with anti-ship cruise missiles. The Saudi leader, who has waged a brutal war against the Iran-backed Houthis, urged Putin not to arm the group, and Russia obliged.

Saudi Arabia is competing with Russia for the position of the world’s largest exporter of crude oil.

Like other Gulf states, Saudi Arabia has its own currency. pegged to the dollar and it sells its oil in greenbacks, increasing the dollar’s position as the world’s reserve currency.

Saudi Arabia in January 2023 said It was considering trading in currencies other than the U.S. dollar after reports it was in talks with China to sell some crude in yuan.

It is not clear how much European debt Saudi Arabia owes, but its central bank’s net foreign currency reserves standing up At $445bn. Saudi Arabia holds $135.9 billion in US Treasuries to put It ranks 17th among investors in US bonds.

US President Joe Biden’s pledge to make Saudi Arabia “a pariah” in the Middle East and the killing of Washington Post columnist Jamal Khashoggi underscored fears that Washington could one day replace its decades-old ally.

Biden has since been leaning on Saudi Arabia to seal a normalization deal with Israel and play a role in the post-war governance of the Gaza Strip.

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