I woke up to hear the welcome news that EC big wig Ursula Von Der Leyen is committing to use frozen Russian assets for Ukraine’s reconstruction.
Arguments against are based on this representing an attack on private property rights are complete and utter bollo*ks. Excuse my French.
If it is, an attack on private property rights that is, it’s already happened with the freezing of these assets in the first place. If you are a regime like China and Saudi Arabia, with assets in the West and you are worried that the same could happen to you, well you are already assuming these assets are gone from Russia, and likely you have already drawn the conclusions.
The assets have already been frozen, put beyond the use of Russia, it has already lost their use, and the likes of Saudi Arabia and China would I think get the message already from that.
But I think they will also realise that this is such a special case, and a clear cut case where one country invades another, destroys much of that country, carries out war crimes, and genocide, why would it not have to pay reparations? Durgh! It is unlikely to happen to China or Saudi Arabia unless they do precisely the same things as Russia has done – so don’t invade another country, don’t destroy that country, don’t partake in war crimes and genocide.
Actually you can make a compelling case that this absolutely has to be done to set an example to others – but the example has already been set by the first freezing of these assets.
I get it will take time to cross the legal hurdles, but maybe in the interim Western countries should think of innovative solutions where they prior commit to utilise these frozen assets for Ukraine, and use these committed funds to provide collateral for Ukraine to borrow (a Brady bonds style plan for Ukraine).
Perhaps innovative insurance solutions can be used to cover the risks of the funds not legally getting the sign off.
Perhaps even unused SDR allocations can be used by G7 countries to cover the insurance costs related to this.
Guys, it’s not rocket science, think outside the box, and find solutions NOW. Ukraine is fighting this war for its survival, and actually in defence of us and our system of governance. It needs the cash now to rebuild critical infrastructure and to be able to win this war.
Close to $400bn in Russian assets have been frozen. Why should Western taxpayers pay for Ukraine’s reconstruction when Russia is responsible and the funds are available? No, they should not and given the current global cost of living crisis, they will not.
So if huge sums of money are needed for Ukraine’s reconstruction, it simply has to come from frozen Russian assets. If not, from where else? Indeed, if these assets are not freed and allocated to Ukraine, Ukraine reconstruction will not happen/fall well short of what needs to be done.
Wake up everyone!
Timothy Ash is a Senior Emerging Markets Sovereign Strategist at RBC BlueBay Asset Management. He is an Associate Fellow at Chatham House on their Russia and Eurasian program.
Reprinted with author’s permission from @tashecon blog firstname.lastname@example.org.
The views expressed are the author’s and not necessarily those of Kyiv Post.