The EU and the West are increasingly raising the issue of seizing sanctions on Russian assets to rebuild Ukraine’s destroyed infrastructure. In an exclusive interview with Facts of the Week, Anders Aslund, a world-renowned economist and professor at Georgetown University, explained how we could do this.
– The US is the first who start a discussion about whether the frozen assets of Russia and its oligarchs should be transferred to Ukraine. Where will this money come from?
– The first source is, of course, $ 300 billion in reserves of the Central Bank of Russia. They are now in seven western countries to nationalize them. In this case, the funds will belong to these countries. And Ukraine needs to negotiate with them to get this money.
The second source is the money of the oligarchs, which President Biden suggested that the United States nationalize through the law. This is not an easy task in Congress because it questions property rights.
– What are the main difficulties with the money of the Russian elite, and what amounts are involved? Are there any estimates? How many of them can be transferred to Ukraine?
– About $ 50 billion in total in the West is frozen. And I think there should be $ 400 billion, but it won’t be that much. Optimally possible, $ 100 billion can be added from these resources and then received as grants from the European Union, the United States, Canada, and England. This is for five years or more. In total, we can discuss $ 500 billion for reconstruction and reforms and Ukraine’s accession to the EU over five years.
– As for the United States, are there many assets of Russian big money here? And where to look for the rest?
– This is not a lot of US resources. Here we can discuss several billion dollars from only this $ 50 billion. Because where is the most money? In Jersey, it is a small island in England, $ 7 billion in Roman Abramovich, $ 7 billion in the Cayman Islands, and $ 8 billion in Switzerland. And it is pretty unrealistic that this money will be used and confiscated. Dubai has the most money, but it is most challenging to get it. We have no idea how many there are. The Cayman Islands and Dubai are the most significant black holes in the world economy.
– Under what conditions can Ukraine get money from frozen assets?
-There should be transparency and no corruption, and good governance. What have we seen in such cases before? Various Ukrainian figures and agencies wanted to receive this money but did not receive it because there was no agreement.
And another version is, of course, the question of where to send money and under what conditions. There are a lot of negotiations now with many partners, and it will be a challenging process.
I would like to see the United States, Britain, and the European Union organize a joint fund for this money and agree with Ukraine on how to distribute this money.
– Has there been a similar practice in the world and, in particular, in the United States?
– There were several examples of central bank reserves. The last one is the Central Bank of Afghanistan, where, if I remember correctly, $ 9 billion was frozen when the Taliban came to power. Biden then issued a decree to transfer the money to the victims of the 2001 terrorist attack in New York. It can be done by decree.
– But to transfer to Ukraine the frozen assets of the Russians want to pass a particular bill. I understand this because the amount is unprecedented and to minimize litigation. How fast can the money transfer process itself move?
– This can be done very quickly if you think about everything in terms of legislation. Now, you see how the United States suddenly decided to transfer $ 14 billion to Ukraine. When there is an agreement in Congress, everything is speedy. It is also expected to cost $ 33 billion by the end of September, as proposed by Biden. Everything can be resolved in two or three weeks.
Photo: Atlantic Council