The recent approval of a $50 billion loan by the Group of Seven (G7) countries, which will be repaid by the proceedings of the so-called immobilization of Russian assets, has the potential to affect the current standing of the Western financial system. The deal, which was finalized on October 25, establishes that these disbursements will encompass help to “Ukraine’s budgetary, military and reconstruction assistance.”

The U.S. will provide $20 billion as part of this package, with President Biden stating that, at last, “Ukraine can receive the assistance it needs now, without burdening taxpayers.” However, this action and its legality have experts reflecting on the possible consequences of leveraging Russian assets’ proceedings for the war effort.

Sergio Rossi, professor of macroeconomics and monetary economics at the University of Fribourg, commented on this hypothetical development in February, stating he believed it was not possible to do this legally in Western countries.

In addition, Rossi stated this can affect the reputation of these countries for holding capital from other nations. On this, he stressed these measures might “give rise to some reputational risks at international level, since these countries might be considered less trustworthy in managing foreign financial capital, which is thereby subject to confiscation in a not-too-distant future.”

Deputy Finance Minister Ivan Chebeskov also weighed in on the issue, stressing this would have profound consequences for the international financial system and the future of the U.S. dollar as a world currency.

Read more: Russia Warns of Global Market Shock if Frozen Assets Are Tapped, Intensifies Sanctions Threat

While this is a step down from directly using the confiscated assets for war objectives, President Putin has qualified these movements as “theft” and “trickery,” pointing out that this behavior would not go unpunished.

Writers’ take: Taking money from Russian proceedings to support the war is a clear sign of the public lack of support for financing the Ukrainian side. The blurry legality of the subject, in addition to the risks it brings to the stability of the global financial system, seems to indicate there is a rush to help Ukraine end the conflict that might extend more years otherwise.

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