Ukraine’s Zelenskiy Asks Global Leaders to Seize Russian Assets

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(Bloomberg) -- Ukrainian President Volodymyr Zelenskiy told a gathering of global finance leaders in Washington that his country needed $14.1 billion immediately for critical reconstruction needs and pleaded with officials to use frozen Russian assets to help pay the cost.

“For people to return and the aggressor to lose not only on the battlefield but truly in everything, we need approval for this support program,” Zelenskiy, speaking Wednesday via videoconference, told a gathering that included US Treasury Secretary Janet Yellen and chiefs of the International Monetary Fund and the World Bank.

Zelenskiy stressed the importance of extracting compensation from Russia as a way to dissuade other countries from pursuing similarly aggressive behavior.

“It’s necessary to work on concrete mechanisms for using frozen Russian assets to compensate for the damage caused by Russia,” he said. “It will be a peacemaking act on a global scale. Potential aggressors must see this and remember that the world can be strong.”

The Kremlin launched full-scale invasion of Ukraine more than a year ago, killing thousands and driving more than a third of a pre-war population of 40 million from their homes. Russian troops destroyed some Ukrainian towns, while missile attacks have seriously damaged infrastructure, including energy facilities.

The Ukrainian economy shrank more than 30% last year, and the World Bank estimated Kyiv will need at least $411 billion for its recovery and reconstruction.

Read more: Putin Bombs Energy Grid, So Defiant Kyiv Uses Camping Gear

Finance Minister Serhiy Marchenko said Ukraine has $3.3 billion in its budget to finance urgent recovery needs this year, while the rest should come from abroad.

On the top of reconstruction needs, Ukraine was seeking at $38 billion in external financial aid to help cover its budget gap. The US will provide Ukraine with almost $10 billion this year, while the EU will give 18 billion euros ($19.8 billion).

The IMF board signed off on a $15.6 billion four-year aid package for Kyiv last month, changing the fund’s rules for the first time in its history to allow lending to a country at war. It disbursed $2.7 billion immediately.

The program aims to bolster the country’s economy, strengthen its institutions and promote long-term growth and reconstruction after the war.

HeyHeyHayden on April 13rd, 2023 at 01:57 UTC »

This just isn't going to happen. The short version is seizing Russian assets would set a precedent that the U.S will steal the assets of anyone who they consider an enemy, or associating with an enemy.

If you're thinking "Yeah but who cares about those countries/people", you're forgetting that the U.S has shown it is extremely unpredictable in changing who is an enemy and neutral to them, and for even pro-U.S countries and people this is a risk they aren't going to take.

It doesn't matter if these people or countries are aligned with Russia or not. A risk of asset seizure that does not exist in other countries would mean investing or keeping assets in the U.S would become unpalatable for everyone bar the U.S' closest allies. This foreign investmenr is in the TRILLIONS, and within a week of seizure of Russian assets hundreds of billions of dollars would be withdrawn by individuals, companies and countries from the U.S, almost certainly causing a financial collapse.

Edit: To partially answer a lot of people comments about why Ukraine needs so much money after just being given billions:

Wars are extremely expensive. Ukraine's economy was pretty abysmal pre-war, and has pretty much collapsed during the war. The only reason it's still going is huge volumes of support in the sum of tens of billions in economic aid by Western nations, tens of billions in loans backed by Western nations, and a mass amount of other non-economic measures to prop up the countries economy (removing tariffs on Ukrainian products, other countries paying to transport it, or governments buying Ukrainian goods that they don't need.

The country also has almost no ability to domestically produce weapons, so it's military are entirely reliant on what they can capture (which isn't much compared to usage) and aid from Western nations, which is extremely expensive.

Both of these are before you get to money spent on rebuilding critical services destroyed, paying for social measures for the homeless, hungry and freezing citizens, health system costs and the cost borne by Western nations of hosting millions of Ukrainian refugees.

Essentially, running a country is extremely expensive, paying for someone else to run their country is expensive too.

treadmarks on April 12nd, 2023 at 22:56 UTC »

It would be better to hold onto that card for the peace talks.

Numentia on April 12nd, 2023 at 22:10 UTC »

Freezing assets is one thing, seizing them is another.