Saudi Arabia’s Crown Prince Mohammed bin Salman.
© SPAFILE: Saudi Arabia’s Crown Prince Mohammed bin Salman.
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."

Comment: An interesting statement, because stealing assets does not promote either.

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.

Comment: It likely was out of self-interest, which, these days, also just so happens to align with a growing number of nations who are also aware they might fall victim to the collapsing West-Israel regimes.

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.

Comment: Even that wouldn't be enough; the West has already given Ukraine $100+ billion to Ukraine.

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.

Petrodollar System

Saudi Arabia is the world's biggest exporter of crude oil and its central bank has net foreign reserves of $445 billion. The sovereign wealth fund also has almost $1 trillion of assets.

Neither the central bank, known as SAMA, nor the wealth fund breaks down foreign assets by currency or country. But the bulk of the holdings are in dollars. Saudi Arabia owns $135 billion of US Treasuries, according to the American government's latest data.

Comment: China does too, but it's increasingly divesting itself of them: China dumps record $53.3 billion of US debt treasuries

Two of the people questioned the credibility of Saudi Arabia's threat, noting that there had been little movement away from G-7 currencies when the Russian assets were first frozen shortly after the full-scale invasion of Ukraine in February 2022. G-7 members also said there weren't many reliable alternatives for the Gulf nation to pursue beyond the dollar and euro.

Saudi Arabia sells its oil in dollars, boosting its status as the world's main reserve currency. Despite widespread speculation that it will switch to other currencies, including China's yuan, Saudi officials have consistently played down the idea, saying that sticking to the dollar is the best thing for the kingdom's economy.