FROM THE ANALYST-
THE TWISTED TALE OF WHAT TO DO WITH RUSSIAN MONEY

Variously sat about in the banks of nations around the world is just short of $1 trillion in Russian Central Bank assets. Around $800 billion of that is in the US and Europe. Variously split between the UK, France, Switzerland and Germany. That amount is roughly ten years of Ukrainian GDP based on 2021 figures.
One of Putin’s most devastating impacts on Ukraine in 2014 with his interference in Donbas and annexation of Crimea, was the tanking of the Ukrainian economy. Previously running at about $190 billion in 2013, the invasions and war that they created, the loss of confidence in the Hryvina, Ukraines currency caused that to fall 50% in value. The economy crashed to $80 billion. It was an economic catastrophe for Ukraine.
The invasion and mass exodus in 2022 cut that to $50 billion.
Ukraine has lived on EU, US, IMF and micro loans and gifts from around the world. The EU supporting it with $12.5 billion a year for four years is a huge deal. It’s make it or brake it transaction, and while it sounds small in monetary terms globally its impact is vast inside Ukraine. It really makes a difference. It pays salaries and pensions and The State continues to function which keeps the economy going.
For a long time everyone has looked at the blocked Russian money and wondered what to do with it.
Britain, the greatest money laundering centre for oligarchs and illegal money anywhere, all operated by ‘invitation only’ organisations that make anything look legal, is sat on the biggest individual pile. Some £300 billion of it.
Afraid of being seen by its global clientele as willing to simply steal their money and give it to whoever they fancy, Britain has come up with a novel solution. It will lend Ukraine the money in the expectation that post war, Russia will repay the money to Ukraine as reparations and Ukraine to the UK so that the UK can in effect give it back to Russia. That’s so British in terms of circular indifference and not taking responsibility it takes my breath away.
The Americans are far less bothered.
They have such a dominant position in the Dollar that the idea of confiscating the Russian money and just giving it to Ukraine is high on the agenda.
France, Germany, Italy and Switzerland who have sub-€100 billion deposits are also not in favour of handing the money over. For the same reason as the British. But Switzerland has already lead the way and is now paying out the interest accumulated on the money to Ukraine. Between them they have around €200 billion and the interest at 7% per annum is a whopping $14 billion - money Ukraine desperately needs. Even if the UK paid out a similar rate in interest and the US added its share, between them they would virtually add 40-50% of Ukrainian GDP in the space of a year. It’s another no-lose scenario for the Ukrainians and it’s politically and fiscally irresponsible that it’s taken two years to still not decide what to do!
These sums are transformational. The sweet, sweet irony of Russian ill-gotten gains paying for the weapons that will defeat Russia is just too lip smackingly delicious to imagine. How has this not yet been done? The simple fact is it’s money. Somebody always wants to hold onto it. And the fact is there’s plenty of cowardly backroom boys wondering quite what the Russians might do about it. Fiscally not a lot. But the damage it might do permanently, to post war relations as political and nationalist embitterment rises yet again in Russia (as it did in Germany in similar fiscal circumstances post WW1, leading to the rise of Hitler), isn’t lost on some.
It’s not lost on me. And that’s why I say pay the interest and hold the lump sum hostage to Russian end of war and post-war behaviour. They may well need that cash to recover - in a way post-Putin, that we can work with. If it’s not there it’s gong to lead to longer term problems. Keep the cash, pay Ukraine the interest. That’s the solution that until the war is over, is the most flexible and responsible.
CONTINUES….CONTINUES…
It covers the now and the future. Nobody wants another bout of Russian nationalism and fascism in 20 years time.
Save and compensate Ukraine for what Russia has done to it, and use it to construct a responsible moderate Russia for the future. We cannot ignore there will be a future.
How wars end is just as vital as how wars are fought. Especially if you don’t want another one. How many times do we have to go through these cycles to learn that lesson?

Slava Ukraini 🇺🇦
@ukrainejournal