The UK is ready to use something like a syndicated loan or bond, using frozen assets of the Russian Federation as a guarantee, to help Ukraine, on the grounds that Russia will be forced to pay reparations to Ukraine after the war, British Foreign Secretary David Cameron said, UNN reports with reference to The Guardian.
Details
Cameron said that assets will be used as a guarantee of reparations.
"This plan is more radical than the proposals discussed in the European Union that Ukraine should be given only windfall profits from the Russian central bank's assets owned by the West. The annual windfall profits are estimated at $4 billion," the newspaper notes.
There is an opportunity to use something like a syndicated loan or bond that effectively uses frozen Russian assets as a guarantee to provide this money to Ukrainians, knowing that we will reimburse them when Russia pays reparations. This may be the best way to do it. We want to get as much G7 and EU unity as possible on this, but if we can't get that, I think we'll have to move forward with allies who want to take such action.
- Cameron told Peers on Tuesday night.
The British Foreign Secretary noted that he did not think the bond plan would in any way undermine the reputation of the City of London.
"This is the first time that Cameron has spoken so openly about the proposal in such detail, and appears to emphasize the political support for the plan in the US but not in the EU," the newspaper writes.
This plan, as noted, will be "especially useful for Ukraine if the US Congress continues to block aid to Ukraine, as it will provide Ukraine with a new source of funds for arms purchases and budget deficit financing.
For over a year now, the G7 has been debating whether it is possible to confiscate the assets of the Russian central bank frozen during Russia's invasion of Ukraine without undermining confidence in the international financial system.
The country's foreign minister also reportedly said that he did not think that Russian President Vladimir Putin would stop in Ukraine, stating that "if we allow Russia to win in any form in Ukraine, Moldova will be threatened, and some of the Baltic states will be threatened.
Addendum
According to EU estimates, the assets of the Russian central bank amounting to about 260 billion euros have been frozen in the form of securities and funds in the jurisdictions of G7 partners, the EU and Australia, with more than two-thirds of the assets frozen in the EU.
Belgium is believed to control about 190 billion in assets held in its euro-denominated financial and settlement chamber, and it is said to be "the most reluctant to follow such a radical plan as Cameron has laid out." The Belgian institution says it is already facing a number of court cases, mainly in Russia, "and its position is supported by France and Germany.
The U.S. Treasury, which was initially reluctant to confiscate the central bank's assets because of the alleged inviolability of sovereign assets, warmly welcomed the idea of bonds, the newspaper said. It is estimated that the US has between $40 and $60 billion in Russian assets, while the UK is closer to £25 billion, but the official figure is not disclosed.
"The strong point of the proposal is that the seized assets will be considered returned to Russia after reparations are paid," the publication notes.
Similar appropriations of state assets, as noted, have occurred before, most notably the UN-sanctioned confiscation of billions of dollars of Iraqi funds that were intended for reparations to Kuwait after the 1990 invasion.
