Saudis Warned G-7 Over Russia Seizures With Debt Sale Threat

(Bloomberg) -- Saudi Arabia privately hinted earlier this year it might sell some European debt holdings if the Group of Seven decided to seize almost $300 billion of Russia’s frozen assets, people familiar with the matter said.

The kingdom’s finance ministry told some G-7 counterparts of its opposition to the idea, which was meant to support Ukraine, with one person describing it as a veiled threat. The Saudis specifically mentioned debt issued by the French treasury, two of the people said

In May and June, the G-7 was exploring different options regarding the Russian central bank’s funds. The group eventually agreed to tap the profits generated and leave the assets themselves alone despite a US and UK push for allies to consider bolder options, including a direct seizure. Some euro-member nations were against that idea, concerned it could undermine the currency.

Saudi Arabia’s stance likely influenced the reluctance of those countries, said the people, who asked not to be identified to discuss private conversations.

“No such threats were made,” according to a statement sent from the Saudi finance ministry. “Our relation with the G-7 and others is of mutual respect and we continue to discuss all issues that promote global growth and enhance the resilience of the international financial system.”

The kingdom’s holdings of euro and French bonds may amount to tens of billions of euros, but probably aren’t big enough to make a major difference if sold off. European officials were still concerned because other countries might have followed Saudi Arabia’s lead.

One Saudi official said it wasn’t the government’s style to make such threats but that it possibly outlined to G-7 members the eventual consequences of any seizures.

The Saudi position changed after G-7 nations went with a proposal that didn’t expropriate the assets, one of the people said.

It was unclear, said the people, if Saudi Arabia acted out of self-interest — fearing a seizure would set a precedent that could be used against other countries in future — or in solidarity with Russia. Riyadh and Moscow have maintained close relations since Russia invaded Ukraine and together lead the OPEC+ cartel of oil producers. The Saudi government has also built ties with Ukraine, and President Volodymyr Zelenskiy traveled to the kingdom last month to meet Crown Prince Mohammed bin Salman.

Whatever its motive, Saudi Arabia’s move underscores its growing clout on the world stage and the G-7’s difficulty in garnering support from so-called Global South nations for Ukraine in the face of Russia’s aggression.

Under Prince Mohammed, Saudi Arabia’s de facto ruler, Riyadh has increasingly positioned itself as a diplomatic powerhouse and has said it wants to mediate between Kyiv and Moscow.

The French government didn’t immediately respond to requests for comment.

At a summit in Italy in June, after months of discussions, G-7 leaders agreed to a financial structure that will provide Ukraine with about $50 billion of fresh aid. The seven member nations and the European Union agreed to give loans that will be repaid using the profits generated by Russia’s roughly €260 billion ($280 billion) of blocked funds, most of which sit in Europe.

The funds are expected to generate between €3 billion and €5 billion annually.

The G-7 and EU are finalizing the mechanics of the scheme. Some EU nations hope the plan is a step toward doing more with the assets and such calls are likely to grow louder the longer the war continues and the more Ukraine’s reconstruction costs mount.

Turkey has no intention of dropping its careful balancing act of belonging to NATO, warming ties with Russia, and being a sort-of ally to Ukraine as the military alliance prepares a show of unity in Washington this week.

Turkish Defense Minister Yaşar Güler bristled at the idea that Turkey is out of line with the rest of the alliance that Ankara joined in 1952.

“We absolutely reject the statement that [Turkey] is unreliable; there is no such thing," Güler said in written responses to questions from POLITICO.

"In an environment where 32 allies are together, it is unthinkable to have the same views on every issue,” he added.

“Some countries are trying to create such a perception,” he said, flagging Germany's export restrictions on Eurofighter jets that Ankara seeks to acquire, calling them “the real issue that creates distrust within the alliance.”

But there's no denying that Turkey is not a standard NATO member.

Along with Hungary it has the closest relationship with Russia. Most European NATO members are also in the EU; Turkey is not. It has the largest military in the alliance besides the U.S., and has its own security interests — a military deployment in Syria, and frequent incursions into Iraq to attack Kurdish militants there.

Turkey maintains ties with Moscow and is bucking the sanctions on Russia that have been endorsed by most of the country’s NATO partners. Güler, however, called Ankara's stance on the Ukraine war “balanced and active … within the framework of strategic partnership with Ukraine and positive dialogue with Russia.”

“To date, Türkiye has been the only country that has been able to bring both sides of the war together in high-level talks,” the defense minister said, referring to the country by its preferred name.

Open lines to Kyiv and Moscow

Turkey has supplied Kyiv with drones and warships but has also kept buying Russian oil and gas. It has played an active diplomatic role, maximizing its position as a Black Sea neighbor of both Russia and Ukraine and brokering a — now lapsed — agreement to allow the shipping of Ukrainian grain.

“We will not allow the Black Sea to turn into a strategic battlefield,” Güler said.

Aaron Stein, president of the Foreign Policy Research Institute, a nonpartisan U.S.-based think tank, said Turkey will persevere with its fence-sitting because Ankara “appears to have concluded Ukraine cannot win, and therefore it is good to have a good relationship with Moscow.”

Stein spelled out Turkey's goals: “Turkey wants to keep tensions with Russia low, keep NATO out of the region, and ensure that any potential escalation is controlled.”

​​​​​​​ Economics is a big factor. Russia supplies 49 percent of Turkey’s energy needs, largely through the sale of gas. It's also the largest source of Turkey's imports, accounting for $45.6 billion in 2023.

Meanwhile, the number of Russian companies in Turkey has jumped to 1,363 from just 177 in 2022. To many of Ankara’s NATO allies, it looks like a bid to circumvent Western sanctions.

​​​​​​​

The 11-day drill named Eagle Assault 2024 started on Monday at a shooting range in the Brest region close to Poland. It comes ahead of NATO’s summit in Washingtonthat opens on Tuesday and after Belarus last week joined a regional security organization led by China and Russia.

Belarus’ authoritarian President Alexander Lukashenko, who has ruled the country of 9.5 million with an iron hand for three decades, has relied on close ties with his main sponsor and ally Russia, and also sought to forge increasingly close relations with China.


Lukashenko has become a pariah in the West after unleashing a brutal crackdown on the opposition in response to massive protests in 2020, triggered by his disputed reelection that the opposition and the West denounced as rigged. The West has responded by imposing sweeping sanctions on Belarus.

He also allowed Russia to use his country as a staging ground for the February 2022 invasion of Ukraine. In 2023, Russia also moved some of its tactical nuclear weapons to Belarus.

Lukashenko and his officials have repeatedly accused NATO of hostile intentions. “Our country takes all the necessary measures to avoid an escalation, but we will respond harshly to any attempt to violate our border,”



The Belarusian Defense Ministry said that as part of the joint drill, the Belarusian and Chinese troops will practice airborne assault, river crossing and residential area combat.

“The situation in the world is difficult, and so we are practicing new forms and methods of solving tactical tasks,” said Vadzim Dzenisenka, the chief of the Belarusian military’s special operations command.

A statement from the Chinese Defense Ministry said the forces will also practice hostage rescue and counter-terrorism operations. “The joint training aims to enhance the coordination capabilities of the participating troops and deepen practical cooperation between the two armies,” it said.

Belarus last week joined the Shanghai Cooperation Organization, established in 2001 by China and Russia to discuss security concerns in Central Asia and the wider region.

"The war in Ukraine has triggered the largest migration flow in Europe since the expulsion of Germans from many countries after the Second World War," says Tomáš Sobotka from the Institute of Demography at the Austrian Academy of Sciences in Vienna, one of the editors of the European Demographic Datasheet.

"This movement has dramatically accelerated the long-term trend of population decline and low birth rates in Ukraine, and it will have a lasting negative impact on the country's population structure and dynamics for many decades to come. The latest analyses also highlight the significant role migration will play in Ukraine's future demographic changes."

The impact of migration on Ukraine's population

IIASA Population and Just Societies Program Director, Anne Goujon, a demographer and one of the primary authors of the study, collaborated with the European Commission Joint Research Centre to analyze the impact of four distinct migration scenarios on population projections until 2052.

"Exploring potential futures using 'what-if' scenarios with varying assumptions is necessary to provide policymakers with a nuanced picture of how migration could impact the future of the Ukrainian population. More importantly, this research can help to make informed decisions about the allocation of support in line with the country's needs," she explains.

In the most pessimistic scenario of "long war and low return," the population could shrink by 31%. Even in an optimistic scenario where Ukraine quickly recovers, a population decline of 21% is forecasted. These scenarios underscore that migration will be as pivotal as fertility and mortality for population dynamics in the Ukraine post-war period.

According to the researchers, the expected sharp population decline is accompanied by the challenges of an aging population and a shrinking work force, which will put further strain on the country's economy and social security systems