from RT:
Today’s Western leaders exhibit a strange mix of self-assuredness and anxiety that’s characteristic of those defending the status quo during times of sweeping change
US Treasury Secretary Janet Yellen has become the latest to add her voice to the growing chorus of Western officials calling for the seizure of Russia’s $300 billion in frozen foreign-exchange reserves for the benefit of Ukraine. This comes after UK Prime Minister Rishi Sunak penned an op-ed over the weekend in which he called for the West to be “bolder” in moving toward confiscating the assets.
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Notwithstanding the reticence being displayed in some quarters of Europe and various admonitions that such an action would be both blatantly illegal and also detrimental to the integrity of the financial system, the idea seems to be taking on a momentum of its own, particularly in Washington and London.
What we are seeing is a vivid example of the type of thinking that places perceived short-term gains ahead of a commitment to preserve the integrity of an institution that derives its potency precisely from widespread confidence in that integrity. It is also, as we will see, a manifestation of a particular type of paradoxical impulse that arises during times of momentous change.
In this case, the institution in question is the Western-led global financial system, at the very heart of which is the US dollar. Outright confiscation of the Russian central bank reserves that have been immobilized since shortly after the Ukraine conflict began in February 2022 would deliver another jolting blow to the credibility of this system. Even as most of the assets are actually held in Europe, there would be no confusion about who was calling the shots and whose credibility is on the line.
Of course, views differ about how much integrity the dollar-centric system ever had, and certainly the entire Bretton Woods framework established in the waning days of World War II very much served the interests of the victorious Americans. But it cannot be disputed that for decades the dollar was widely viewed across the geopolitical spectrum as not just a market-determined reference point and currency for trade but as a safe store of value. As trade became increasingly liberalized, assumptions about a safe and dependable dollar system were built into all manner of economic and trade policies. Such assumptions became part of the very fabric of the global financial system.
