Make Putin pay
Guest columnist Fen Hampson: The next $300 billion for Ukraine could come from Russia
I asked Fen Osler Hampson, one of Canada’s leading foreign-policy thinkers, to write about the aftermath of Alexei Navalny’s death in prison. I wanted to focus on concrete steps the West could take, and ways Canada could show leadership, in helping turn the tide against Putin’s aggression. Dr. Hampson is a leader in the international effort to freeze Russian assets and use their value to support Ukraine’s defense. I’m grateful to him for writing this so quickly. His bio appears below. — pw
The sudden, unexplained death of Alexei Navalny, the prominent Russian opposition leader, lawyer, and anti-corruption activist in a Russian prison who appeared to be healthy and well at a court appearance the day before he died, is a stark warning that now is not the time for the West, in the words of Margaret Thatcher, “to go wobbly” against Russia.
Alas, the West is now wobbling in too many directions.
On Capitol Hill, Republicans who have fallen under presidential contender Donald Trump’s spell want to kill the administration’s proposed $US60-billion aid package to Ukraine. Trump himself has given an open invitation to Vladimir Putin to invade any NATO member that is not paying its full freight — 2 per cent of GDP — in defence spending. Resurgent extreme right-wing parties in Europe also want to make nice with Putin, especially in those parts of eastern Germany where segments of the public are sympathetic to Russian imperialism and continue to believe that life was better under Communist rule.
Western publics have also grown weary of underwriting a war that shows no sign of ending anytime soon. In the US, polls show that a plurality of Americans — 41 per cent — say the US is doing “too much” to help Ukraine. That number jumps to 62 per cent among declared Republican voters.
Here in Canada, a recent Ipsos poll showed that 40 per cent of Canadians still want Ukraine to keep fighting — but 30 per cent want a brokered settlement to the conflict. However, support for the war is stronger among Liberal than it is among Conservative supporters. Canadians are also apparently losing interest in Ukraine as other conflicts, like the war in Gaza, continue to grab headlines.
With voter fatigue about mounting bills for Ukraine setting in, Western leaders have begun to explore a proposal to seize frozen Russian assets — some $US300 billion or more — to help Ukraine.
The idea was first floated by Canadian Finance Minister Chrystia Freeland and subsequently incorporated into Canadian legislation. Prominent Americans like former US Treasury Secretary Larry Summers and former World Bank President Bob Zoellick have since jumped on the bandwagon and called for confiscation, as have British Foreign Secretary David Cameron and EU President Ursula von der Leyen.
The proposal is now the focus of three special G7 working groups studying the legal, financial and policy implications of asset seizure.
Following Canada’s lead, the legal groundwork is also being laid in other countries. In late January 2024, a US Senate committee approved legislation to go before the full Senate that would give the President of the United States the authority to confiscate Russian assets — though a prominent Republican, Senator Rand Paul, recently warned the proposed legislation would boomerang and further destabilize relations between Russia and the West. UK parliamentarians are also exploring the legislative requirements for such action.
But there are serious divisions over what to do with Russian assets. On one hand, Canada, the US, and Britain want to seize Russian assets and “collateralize them” to underwrite Western loans to Ukraine as the bill for Ukraine’s defence and reconstruction mounts. On the other, Germany, France, and Italy worry about the knock-on effects of confiscation on the euro as a global reserve currency and investor confidence in their financial institutions.
Another problem is that a good chunk of those Russian monies — almost $US200 billion — are held in Euroclear accounts in Belgium while another $US8.8 billion is in Switzerland. Neither country is all that keen on the idea of outright confiscation. Lieve Mostrey, the CEO and Chairperson of Euroclear, very recently warned that a plan to use Russian assets as “collateral” would be “pretty close to an indirect seizing or a commitment to future seizing, which could have exactly the same effects on the market as a direct seizing.”
The European Union is prepared to use the future profits of Russian frozen assets to help Ukraine, but the amounts would be modest and leave the main assets untouched.
With a bit of imagination, there are other ways to square the circle on forfeiture, for example, by putting a lien on Russian assets (which is not confiscation) and tying the lien to reparations that Russia will have to pay for its invasion and destruction of Ukraine. That way, Russian reparations become the collateral, not its frozen assets. The lien would only be exercised if Russia doesn’t pay up.
Of course, if the decision to go beyond freezing to seizing (in whatever form such a seizure eventually takes) is left to financial managers and central bankers in Brussels and Switzerland, the status quo will prevail. Ukraine will only then get what Western governments are prepared to cough up and load onto their taxpayers. That is likely to be thin gruel.
It is time to bite the bullet on confiscation and put serious money on the table in defence of Ukraine and its reconstruction. A decision may come when G7 leaders convene for their 50th summit from 13 to 15 June 2024 in Fasano, Italy. When they sit down at the summit table, Navalny and the tens of thousands of Ukrainians who have given their lives in the fight against Putin’s brutal, murderous rule will hover over them like Banquo’s ghost.
FEN OSLER HAMPSON is Chancellor's Professor at Carleton University and President of the World Refugee & Migration Council. He is the author/co-author of 15 books on Canadian foreign policy and international affairs and co-editor of 33 volumes. He holds a Ph.D. from Harvard University and is also a graduate of the London School of Economics and Political Science and the University of Toronto.
“Following Canada’s lead. . .” There are three words you don’t see every day.
A lien against assets forreparations maybe best route. Mother Russia only understands muscle under this regime!