The EU's financial weaponization has backfired. Resulting in massive capital flight from European assets, euro depreciation, rising borrowing costs for EU governments, and the accelerated collapse of the euro's reserve currency credibility.
The European Union just made a catastrophic mistake.
[. . .]
Every country with reserves in European financial institutions had to reconsider their safety. If the EU would seize Russian assets, what stops them from seizing Chinese assets if tensions escalate over Taiwan? or Saudi assets if there's another oil dispute or any nation's assets in a future conflict. The answer, nothing stops them.
[. . .]
Central banks move slowly. But the direction became clear. Reduce European exposure. Increase holdings in jurisdictions with stronger property rights protections or less geopolitical ambition. Ironically, this included increasing holdings in Switzerland, neutral, Singapore, pragmatic, and even China, which now looked safer than Europe for non-western reserves. The European Union's aggressive use of financial warfare made European assets less attractive globally.
[. . .]
The sanctions and asset seizures were supposed to weaken Russia. Instead, they accelerated Russia's pivot away from Europe and integration with non western economies.
[. . .]
For 80 years, the postworld war II financial system operated on certain principles:
- Respect for sovereign property rights
- Sanctity of central bank reserves
- Political neutrality of financial infrastructure.
These principles were never perfectly upheld, but they were strong enough to maintain confidence in the system. The Russian asset seizure shattered these principles explicitly. Central bank reserves are no longer sacrosanked. They can be frozen and seized if the political climate supports it. Property rights are conditional. They depend on maintaining acceptable relations with Western powers. Financial infrastructure is weaponized. Swift custody systems and payment networks are tools of geopolitical competition. Once these principles are broken, they can't be easily restored.
[. . .]
This is how empires decline. Not through single catastrophic defeats, but through accumulated strategic mistakes that seem small at the time, but compound into disaster.
[. . .]
All of it resulted from choices made by European leaders who prioritized short-term political gains over long-term strategic thinking. Russia's response shocked Europe because European leaders didn't think it through. They assumed Western financial dominance was permanent, that sanctions and seizures could be imposed without consequence, that Russia had no effective retaliation options. They were wrong on all counts, and Europe will pay the price for this miscalculation for decades to come.
