How the West can make Putin pay for what he’s done to Ukraine



Yulia Svyrydenko, Ukraine’s minister of economic development and trade, says that with the Black Sea effectively closed off by Russian ships, the country must build more links west.

“Our major task now is to upgrade and increase the throughput capacity of our railways, roads, highways,” she told a recent conference on reconstruction in Warsaw.

The country’s government has signed new deals with Poland to expand railway crossings on the border to get this started.

Igor Burakovsky, director of the Institute for Economic Research and Policy Consulting in Kyiv, says Ukraine’s government is similarly helping businesses adapt with a relocation program to move staff and equipment from hazardous eastern regions to the country’s center and west.

“The government is trying to help people to ship the necessary equipment and materials to new locations,” he says.

That includes finding new suppliers, new routes to market, and even the workforce, whether that is finding accommodation for staff moving across the country, or new recruits when required: “they cannot relocate everybody – some of the people have gone to war.”

Official figures indicate more than 400 companies have been relocated, just over half of which are operational once more.

Self-sufficiency in energy is on the agenda – Svyrydenko says it can be done “within three to five years” – while the country also wants access to western military technology so it can arm itself in the future.

Long-term, it will be crucial to try to encourage investment in eastern Ukraine, where businesses may fear to tread lest the Kremlin invade again in the future.

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Kyiv’s Center for Economic Strategy’s Vyshlinsky suggests offering extra guarantees or insurance to investors putting their money into the region, to avoid abandoning swathes of the country to permanent economic depression.

Perhaps most important will be encouraging refugees to return.

The International Labor Organization estimates that of the 5.2m refugees who have left Ukraine, 1.2m were of working age.

Burakovsky says as many as one-in-five of those who have gone to Poland may already have found work, potentially reducing the chance of them coming back home even once it is safe to do so.

If reconstruction does not begin rapidly, providing homes for refugees to return to them jobs for them to do when they arrive, he fears refugees’ families – typically husbands and fathers, as those leaving are mainly women and children, while men are largely barred from crossing the border during the war – will follow in the years to come.

Funding the restoration of Ukrainian homes and jobs and the reunification of separated families may not be such an outrageous use of Russia’s money.

Which other war-torn countries have used seized assets to rebuild?

By Louis Ashworth

If the West seizes frozen Russia’s assets to fund Ukraine’s post-war reconstruction, it will be far from unprecedented.

Joseph Borrell, the EU’s top foreign policy representative, pointed to similar actions in the past, including against the central bank of Afghanistan.

“We have the money in our pockets, and someone has to explain to me why it is good for the Afghan money and not good for the Russian money,” he told the Financial Times.

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In February, United States President Joe Biden swooped on $7bn (£5.7bn) of assets owned by the Afghan central bank and held in American institutions. Severing the Taliban’s access to the US financial system, he announced $3.5bn of the pile would go towards humanitarian aid, and the rest to the families of 9/11 victims.

The White House said the step would “provide a path for the funds to reach the people of Afghanistan, while keeping them out of the hands of the Taliban and malicious actors”.

Such seizures – of which a Russian one would be by far the largest – have occurred before, but rarely.

In 2003, the Bush Administration seized $1.4bn of Iraqi assets, some of which had initially been frozen during the Gulf War a decade earlier. Treasury Secretary John Snow said the funds would be used to help rebuild America after the war.

The country also seized Cuban assets in 1996, with the money later used to compensate the families of three American pilots who were killed by the Cuban military.

With Russia, the potential seizure would be far bigger. The Kremlin had built up $640bn of foreign currencies and gold in the lead-up to its invasion of Ukraine. At the outset of the conflict, the West moved to limit Vladimir Putin’s access to this warchest – freezing roughly half of the pile.

Even if the West does not plow ahead with a full seizure, even deciding when to unfreeze the assets could prove to be a difficult decision.

More than $1bn of Iranian government assets held in the US were frozen by President Jimmy Carter in 1979, ten days after 52 US citizens were taken hostage at the US Embassy in Tehran.

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That action, Executive Order 12170, sparked decades of demands from Tehran, which eventually took its complaints to the Hague. Some of the money has been returned to Iran since – including $400m flown over in 2016 in exchange for the release of five American hostages.


www.telegraph.co.uk

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George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

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