Larry Elliott and Graeme Wearden
17 January 2024
Britain is ramping up pressure on western governments to use $350bn (£275bn) of frozen Russian assets to help rebuild Ukraine’s war-shattered economy, with David Cameron insisting there were legal, moral and political justifications for action.
The foreign secretary said the countries that were backing Ukraine had economies that when combined were 25 times the size of Russia and it was important to make that firepower count.
Speaking in Davos, where Ukraine has been high on the agenda at the annual meeting of the World Economic Forum, Lord Cameron said: “When Putin launched this illegal invasion, the world changed, and we have to change with it and recognise we are in a more dangerous, uncertain and difficult world. We should be prepared to do some innovative thinking about how we use these resources to help Ukraine.”
The rich G7 countries froze Russian central bank reserves after the invasion of February 2022, and there have been growing demands from Kyiv for the assets to be seized and spent on reconstruction. The European Bank for Reconstruction and Development’s chief economist Beata Javorcik said without continuing flows of financial support from overseas there was a chance that Ukraine’s government would have to print money to pay its bills. “We don’t want a failed state,” she said.
Cameron said the moral argument was straightforward and strong. “At the end of the day, Russia is going to have to pay reparations for its illegal invasion, so why not spend some of the money now, rather than wait till the war is over and have all the legal wrangling about reparations”.
The foreign secretary brushed aside concerns that it could change the way people see financial centres operating, and trigger an exodus of national reserves from western banks.
Cameron said he was working very hard on the issue, as is the rest of the G7, and he was confident of progress.
Bill Browder, CEO of Hermitage Capital Management and longstanding Kremlin critic, said the possibility of Donald Trump winning the next US presidential election should spur policymakers to move speedily. “Donald Trump has said he is going to solve the Ukraine crisis in one day,” Browder told an event at Ukraine House in Davos on Wednesday. “What does that mean? He is going to cut off Ukraine from funding. I would argue, putting aside all these niceties, that confiscating the $350bn is Donald Trump insurance,” Browder added. “It needs to be done before the US election, so that if that were to come to pass, Ukraine can carry on defending itself and win.”