Last month, the European Union (EU) did something unusual. They took money from Russian President Vladimir Putin's frozen assets and used it to help Ukraine. This move was likely sped up by the upcoming change in the U.S. presidency and the influence of Hungary's Viktor Orban. The idea is to lend Ukraine $50 billion using the profits from these frozen assets, which are worth $325 billion. These assets generate about $3 billion per year, which could pay off the loan if Russia refuses to pay for damages after the war.

This isn't just a financial decision. It's also a way to challenge a legal principle called sovereign immunity. This rule helps protect a country's assets from being used in another country. For a long time, Russia has been using this rule to try and keep its assets safe. They say that if one country uses another's assets, it could start a chain reaction and harm the entire global system.

Sovereign immunity has been around for centuries, helping countries respect each other's laws. But this rule isn't set in stone. Over the years, it has been challenged in various ways. For example, Argentina and Greece were both hit by economic crises and had their assets protected by this rule. On the other hand, there was a case where Malaysia was sued over oil rights by a group claiming to be heirs to a former kingdom. This case shows how some countries try to bend the rules for their benefit.

The EU is using this flexibility to their advantage. They want to show that this rule can be changed when needed, like in times of war. This could set a new precedent for how countries deal with each other's assets. If successful, other leaders who make bad decisions could see their protections taken away. But the EU must be careful. They don't want to weaken this rule too much, as it helps keep peace between nations. It's a delicate balance, and one wrong move could cause problems for many countries.

This is a tough task for the EU. They need to make sure that this new rule helps bring justice without causing chaos. It's like walking a tightrope; one wrong step could have big consequences.

Why the EU's Money Move Against Russia Might Not Work

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