Making Putin Pay

This week, G7 finance ministers said that they – together with the international community – will be helping Ukraine to the tune of more than US$ 24 billion this year and beyond. And the door is open for more.

However, this is just a drop in the ocean of blood and destruction in Ukraine. Already three weeks into Russia’s invasion, President Zelenskyy had estimated that Ukraine had suffered half a trillion US dollars’ worth of damage to housing and infrastructure, let alone the ongoing cruel cost of human suffering and death.

Western countries are reported to have frozen at least half of the Russian Central Bank’s estimated US$ 600 billion of foreign currency reserves which are in their possession. Rather than help its own people have better lives, Russia is said to have been gradually putting aside such a colossal sum since Crimea’s 2014 annexation to have a handy “fortress Russia” war chest. They are now experiencing serious difficulties, as much of that prop is no longer available to them.

Add to that at least US$ 17 billion or much more of Russian Oligarchs’ frozen assets, and you are really starting to get closer to the costs of rebuilding eventually at least those areas that remain under Ukraine’s sovereign control once fighting stops.

There is a recent – albeit rather unfortunate – precedent for this. At the end of 2021, President Biden took the decision to appropriate half of the US$ 7 billion in frozen Afghan Central Bank assets to pay compensation to the families of victims of the 9/11 attack pending a court ruling. Many feel the full US$ 7 billion of Afghan funds should instead be transferred to a UN administered trust fund for humanitarian aid to be given directly for the Afghan people, bypassing the Taliban regime. Frozen assets under the West’s control can be redeployed.

This action has shown potentially the way forward in Ukraine. Russia could potentially be forced by the West to pay for much of Ukraine’s reconstruction if the West is prepared to take such a step.

Russia is said to be attempting to take legal action to get its money back. However precedent shows that they may be unsuccessful. According to the Guardian newspaper, the UK supreme court ruled last December against a Venezuelan appeal to allow access to its central bank reserves of almost US$ 2 billion of gold it held at the Bank of England.

This week, Russia tested its new Sarmat intercontinental ballistic missile, which is capable of carrying nuclear warheads. Putin said this would make Russia’s enemies “think twice”. The West needs to be much better in making Russia think twice, by making it clear the more they destroy, the more they have to pay.

Every missile or artillery shell that hits a Ukrainian target should cost Putin dear.

* George Cunningham is Chair of the Lib Dems Abroad Steering Committee Twitter: @GFCunningham

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This entry was posted in Op-eds.


  • nigel hunter 24th Apr '22 - 12:24pm

    To prevent money from dependent countries,Germany for one, being used to fund Putin and his peoples war (the gas they pay him for) those countries have to be heavily supported.
    Afghan money. Starving a poor country of funds for it to develop out of ‘revenge’ for past actions only breeds resentment and further trouble.Yes,the UN should be involved.

  • James Kinsey 24th Apr '22 - 12:47pm

    The Afghans suffering abject poverty & famine must be forgiven for wondering what constitutes a humanitarian crisis – given the international action on Ukraine ..
    Withholding of funds is sheer & utter spite – nothing should surprise us though – as Biden was Obama’s VP who was responsible for the deaths of hundreds of children in Afghanistan with under US drone strikes …The Afghans misery continues ….

  • Brad Barrows 24th Apr '22 - 12:51pm

    It would be interesting to know the value of western owned assets in Russia, be that owned by companies, individuals or governments – you can be sure that if the West decides to seize Russian assets, Russia will seize Western assets.

  • Barry Lofty 24th Apr '22 - 1:39pm

    A very interesting article in todays Sunday Times explaining the lack of foresight and self interest from many western leaders, including the past three British Prime Ministers, the present incumbent included, that allowed Putin the confidence to believe he could attack Ukraine with a degree of impunity.

  • Russia probably does have a legal case to gain access to its central bank reserves. The Venezuela case turned on the ruling that Britain unequivocally recognises Juan Guaidó (and not Maduro) as head of the Venezuelan state.
    The Venezuelan reserves, like Russia’s, are frozen not confiscated. Likewise the assets on sanctioned oligarchs.
    A large proportion of the populations of both Russia and Ukraine live in extreme rural poverty. The communist experiment of the 20th century was a disastrous failure in improving living standards, although China’s state capitalism could offer a better model for authoritarian regimes.
    Ultimately, we have to hold out hope that both Russia and Ukraine can be reintegrated with the political economy of Europe. A Marshall type plan for redevelopment of these economies rather than Treaty of Versailles type reparations may offer a better model for reconstruction. Perhaps unlikely with Putin as head of state. However, Russia gradually recovered from the terror and repression of the Stalin years after his death, albeit it took three decades before Gorbachev began to introduce economic reforms. Perhaps we will see something similar after Putin has gone.
    Afghanistan is in desperate need of humanitarian relief and transfer of the reserves to a UN administered trust fund seems a sensible compromise to try and alleviate some of suffering being experienced by Afghans.

  • Jenny Barnes 24th Apr '22 - 5:12pm

    A 90% import tax on Russian oil & gas might work to both reduce usage and money flowing to Russia. Gazprom gas production costs are around $1.25 /MMBTu, export prices around $11. Such a tax would reduce demand, but much of it would probably be effectively paid by Gazprom reducing their prices in order to continue to export.

  • I recommend looking at this contribution by the Financial Times on YouTube-

    « How London became the dirty money capital of the world »

    Perhaps we need to put right the wrongs in our own society before lecturing to others. In particular the help given by various institutions in the U.K. to move huge assets out of Russia – and who in public life benefited from this.

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