Europe is shooting itself in the foot using Russia’s $300 billion to send arms to Ukraine.

It’ll be shooting itself in the kneecaps with this move.

There’s something called investor confidence. How well someone feels investing money into something.

When you invest in an entity you feel confident that your money will get returns and the safety of that money is ensured, either by an entity or a regulatory body.

Let’s say you put money in the bank and then you get into a fight with the CEO of that bank, he then uses your own money to hire goons to beat you up and this story is published on the internet.

Do you think people will be investing in that bank? Do you think that a CEO is a trustworthy person to employ in any financial institution?

No.

It’s the same case with nations. If Nation A invests money in Nation B and they both go to war with each other, Nation B uses A’s money against him. It sends a terrible message to future investors that their money isn’t safe.

It sends a message that their money is aligned with the interests of the nation and if that nation sees your interests to be different from theirs, they’ll use it against you.

When that happens, investor confidence crashes. Because ethics is extremely important in the financial world.

It’s all about trust and ethics that keeps an entity running. That keeps an entity from functioning. If in wartime you decide to throw out ethics and trust, then you’re basically shooting yourself in the foot.

No one is going to trust you to keep their money with you. It’ll make future investors turn away from you and it’ll make existing investors reconsider whether to leave their money with you or not.

If you’re going to hold hostage the money of your enemies then it’s going to make you look bad, not the other side.

And that’s exactly what’s happening with Europe.

They have $300 billion of assets of Russia, which they are going to use to send funds to Ukraine. It’s an act of desperation from Europe, after America delays sending funds of up to $60 billion to Ukraine.

These assets will be sold off and in exchange used to buy weapons for Ukraine to continue the fight against Russia.

If Europe does go ahead with this plan, they’ll also come at the receiving end, because their assets in Russia could also be used against them.

If Russia doesn’t do that, it can instead influence other allies (Iran and China) to remove investments in Europe, which isn’t financially good for Europe, seeing as it is struggling already.

It could impact the Euro as well, as it will most definitely damage Europe’s reputation, as being untrustworthy and cause significant damage to their soft power, because in the global market, reputation and soft power is what brings in investments.

I’m hoping Europe doesn’t take this drastic step, because already the reputation of Europe is in the gutters, many members are losing faith in the union and the fact that they are now going to plunge themselves into a war with Russia is going to have very terrible consequences on the member states.

One of which could lead to the breakup of the union. As wars usually have devastating consequences.

Thanks for reading.