Mark MacKinnon

March 1, 2023

The Globe and Mail


Ukraine is set to begin using money seized from Kremlin-controlled banks to rebuild homes that were damaged or destroyed over the course of Russia’s invasion.

Last year Kyiv seized 17 billion Ukrainian hryvnia (about US$460-million) in assets from the Ukrainian subsidiaries of two banks owned by the Russian state. That money will soon be used to repair shattered homes – though it’s by no means enough to cover the damage done since the start of the war, even if the conflict were to end today.

Ukraine is hoping that allies such as Canada will contribute other Russian assets seized under the economic sanctions imposed since the start of the war. Olena Shuliak, the head of the parliamentary faction of Ukrainian President Volodymyr Zelensky’s Servant of the People party, said in an interview that it would be a form of “justice” if Russian money were used to rebuild what Russia’s military has destroyed in her country. “We consider it quite fair that this arrested money in Ukraine will help the Ukrainians who lost their homes because of the war,” Ms. Shuliak told The Globe and Mail inside the party’s Kyiv headquarters.

She said the initial tranche of money – which will start being handed out in May – will be available to Ukrainian citizens who apply for compensation via a dedicated website and mobile phone app with proof of property damage suffered during the war. The dispersed funds can only be used to repair homes or to pay for replacement accommodations inside Ukraine, she said.

The 17 billion hryvnia seized from International Reserve Bank, which is owned by Kremlin-controlled Sberbank, and Prominvestbank, an arm of Russia’s official development bank, VEB, will only cover a tiny fraction of the devastation. Entire cities and towns have been left in ruins since Russian President Vladimir Putin launched his full-scale invasion on Feb. 24 of last year.

The Ukrainian government estimates the damage done to civilian homes and infrastructure since then at US$700-billion. Ms. Shuliak said more than 23 million square metres of territory has been affected.

With no end to the war in sight – Russian artillery continues to lay waste to front line cities such as Bakhmut, while cruise missiles and explosive drones regularly strike non-military targets around the country – those figures will continue to rise. The cost of rebuilding a city such as Mariupol, which was shattered over a months-long siege and is now under Russian occupation, is impossible to calculate.

Olena Shuliak said the initial reconstruction fund was something of a test case – that Ukraine hoped its allies would contribute other seized assets once they were convinced of its

effectiveness. After a series of scandals earlier this year that saw Mr. Zelensky fire several senior officials in his government, Ukraine needed to show there was no room for corruption in the rebuilding effort, she added.  “This 17 billion Ukrainian hryvnia is a very minor thing,” she said. “There is proper understanding that more and more money will be needed, but only after the international partners are convinced of the clear nature of this mechanism and its transparency.”

Canada impounded about $122-million in Russian assets over the course of 2022, though it’s not clear if any of that money has been turned over to Ukraine, as envisioned in a special budget measure the government introduced in April. In December, Foreign Affairs Minister Mélanie Joly announced that Ottawa would seize US$26-million in assets from a company belonging to Roman Abramovich, an oligarch with long-standing ties to Mr. Putin. “The proceeds that are generated will be able to be used for the reconstruction of Ukraine and compensation to victims of the Putin regime’s illegal and unjustifiable invasion,” Ms. Joly said at the time. Legal experts, meanwhile, predicted the government would likely face a lengthy court battle before the money could be delivered to Ukraine.

Separately, Canada has announced it will transfer to Kyiv $115-million that was raised via special tariffs on imports from Russia and its ally Belarus. The money is earmarked to help repair Ukraine’s electricity grid and will be sent via the World Bank.


Mark Mackinnon is the Senior International Correspondent for Canada’s national newspaper, The Globe and Mail, and a seven-time winner of the National Newspaper Award, Canada’s top reporting prize.   Author of The New Cold War: Revolutions, Rigged Elections and Pipeline Politics in the Former Soviet Union (Published 2007 by Random House Canada and Carroll & Graf) and The China Diaries e-book (2013).