To punish Russia for its invasion of Ukraine in early 2022, Western governments froze the assets of the Russian Central Bank, Russian financial persons, and officials in the amount of approximately $330 billion. They are now seeking to use these funds to help pay for the reconstruction of Ukraine and help compensate for some of the enormous costs incurred by the West in this war.
From the outset, the seizure of these assets has raised serious legal concerns that have made their use to fund reparations both difficult and controversial. The ensuing legal battles will no doubt last decades, while doing nothing to actually help people in Ukraine. Moreover, since most Russians find the idea of using their purloined assets to serve Western geopolitical objectives “highly offensive,” it will add yet another body blow to a relationship already fraught with recriminations.
I would therefore like to present an alternative approach that, while it may not satisfy the lust for vengeance, might actually serve to promote both reconstruction and reconciliation.
Expanding on ideas that Ted Snider and I recently proposed for a negotiated settlement in Ukraine, I suggest that seized Russian assets be restored to Russia, de jure. This would be an essential first step in restoring the faith of investors in the legal underpinnings of the international financial system. Beyond that, de facto, and as an essential part of healing the wounds of war as quickly as possible, Russia should then be invited to invest these resources in rebuilding Ukraine.
Historically, Russia has always been Ukraine’s largest investor, dwarfing the EU. Dmitry Medvedev, then Russia’s prime minister, put the cumulative value of the tariff waivers, trade preferences, and gas subsidies that Ukraine received from Russia between 1991 and 2014 at roughly $250 billion. Over this same period, Western financial institutions promised Ukraine $62 billion in aid, but actually disbursed less than half this amount. The loss of Russian investment was thus a terrible blow to the Ukrainian economy, especially since comparable Western investments never materialized.
Since 2014, Russia has committed significant resources to the reconstruction of Donbass and Crimea, and is making ambitious plans to do so again in the newly annexed territories of Ukraine — a strong indication of its interest in investing in the Russian-speaking regions of Ukraine. Conversely, Russia is as unlikely to want to rebuild those regions of Ukraine that are openly antagonistic to it, as the West has been to rebuild Donbass and Crimea. But while Russia and the West already have plans to invest in their preferred parts of Ukraine, it has proven difficult to raise the enormous sums of money needed — by some estimates, as much as one trillion dollars.
This problem would be much easier to solve if the task of reconstruction were regarded as a joint endeavor. Perhaps as part of a final and comprehensive peace settlement, a UN fund could be set up for the reconstruction of Ukraine as a whole, under which both Russian and Western aid and investments could be managed and coordinated — a good model, potentially, for post-war cooperation in other areas. A symbiotic division of labor might then ensue, whereby the West could use its funds to rebuild western and central Ukraine, while Russia could use its funds to rebuild eastern and southern Ukraine.
This proposal stems from my conviction that any successful Ukrainian reconstruction program should conceive of assistance to Ukraine not as a vehicle for punishing or manipulating Russia, but rather for healing and reintegration. This approach should be applied first within Ukraine itself, to help heal its persistent regional divisions (which are still very deep, as President Zelensky himself recently acknowledged), and eventually expanded to encompass Ukraine, Russia, and all of Europe.
Since Ukraine is, in any case, destined to remain an object of geopolitical competition, it is important to find creative ways for this competition to manifest itself in constructive, rather than destructive ways. If, as both sides claim, they are competing for the hearts and minds of the people, then let them compete in generosity.
Some might object that such a division of labor would create mutually exclusive economic dependencies that could lead, ultimately, to Ukraine’s partition. I would argue, however, that such a partition is far more likely under the current approach to post-war reconstruction, which envisages using Western funds to assist only those regions of Ukraine that are under Kyiv’s control. By contrast, if cross-border trade is allowed to serve its natural function of encouraging mutual interaction, partition would become far less likely. It is worth recalling that it was Kyiv’s refusal to resume full commercial and banking ties with Donbass, despite these being a key stipulation in the Minsk-2 Accords, that contributed to the grievances that led in turn to the present conflict.
But the internal re-knitting of Ukraine through commerce would be only the first of many potential benefits. The positive impact of the restoration of trade ties would soon be felt over the entire European continent, especially if Ukraine (or at least its most damaged regions) were afforded a special economic status that allowed both EU and Russian/CIS goods to pass freely between Europe and Eurasia.
Of course, extremists on both sides will immediately object to such a compromise. Those who say, “punish Russia, come what may,” will argue that justice must triumph over all other considerations. Meanwhile, those who cry, “to Hell with the West, our cause is just,” will argue that sovereignty must prevail at all costs. But those who can tolerate some untidiness in their world should welcome such a compromise, since it offers both immediate and tangible assistance to those who need it most—the long-suffering people of Ukraine.
![Following a largely preordained election, Vladimir Putin was sworn in last week for another six-year term as president of Russia. Putin’s victory has, of course, been met with accusations of fraud and political interference, factors that help explain his 87.3% vote share. If this continuation of Putin’s 24-year-long hold on power makes one thing clear, it’s that he and his regime will not be going anywhere for the foreseeable future. But, as his war in Ukraine continues with no clear end in sight, what is less clear is how Washington plans to deal with this reality. Experts say Washington needs to start projecting a long-term strategy toward Russia and its war in Ukraine, wielding its political leverage to apply pressure on Putin and push for more diplomacy aimed at ending the conflict. Only by looking beyond short-term solutions can Washington realistically move the needle in Ukraine. Since Russia’s full-scale invasion, the U.S. has focused on getting aid to Ukraine to help it win back all of its pre-2014 territory, a goal complicated by Kyiv’s systemic shortages of munitions and manpower. But that response neglects a more strategic approach to the war, according to Andrew Weiss of the Carnegie Endowment for International Peace, who spoke in a recent panel hosted by Carnegie. “There is a vortex of emergency planning that people have been, unfortunately, sucked into for the better part of two years since the intelligence first arrived in the fall of 2021,” Weiss said. “And so the urgent crowds out the strategic.” Historian Stephen Kotkin, for his part, says preserving Ukraine’s sovereignty is critical. However, the apparent focus on regaining territory, pushed by the U.S., is misguided. “Wars are never about regaining territory. It's about the capacity to fight and the will to fight. And if Russia has the capacity to fight and Ukraine takes back territory, Russia won't stop fighting,” Kotkin said in a podcast on the Wall Street Journal. And it appears Russia does have the capacity. The number of troops and weapons at Russia’s disposal far exceeds Ukraine’s, and Russian leaders spend twice as much on defense as their Ukrainian counterparts. Ukraine will need a continuous supply of aid from the West to continue to match up to Russia. And while aid to Ukraine is important, Kotkin says, so is a clear plan for determining the preferred outcome of the war. The U.S. may be better served by using the significant political leverage it has over Russia to shape a long-term outcome in its favor. George Beebe of the Quincy Institute, which publishes Responsible Statecraft, says that Russia’s primary concerns and interests do not end with Ukraine. Moscow is fundamentally concerned about the NATO alliance and the threat it may pose to Russian internal stability. Negotiations and dialogue about the bounds and limits of NATO and Russia’s powers, therefore, are critical to the broader conflict. This is a process that is not possible without the U.S. and Europe. “That means by definition, we have some leverage,” Beebe says. To this point, Kotkin says the strength of the U.S. and its allies lies in their political influence — where they are much more powerful than Russia — rather than on the battlefield. Leveraging this influence will be a necessary tool in reaching an agreement that is favorable to the West’s interests, “one that protects the United States, protects its allies in Europe, that preserves an independent Ukraine, but also respects Russia's core security interests there.” In Kotkin’s view, this would mean pushing for an armistice that ends the fighting on the ground and preserves Ukrainian sovereignty, meaning not legally acknowledging Russia’s possession of the territory they have taken during the war. Then, negotiations can proceed. Beebe adds that a treaty on how conventional forces can be used in Europe will be important, one that establishes limits on where and how militaries can be deployed. “[Russia] need[s] some understanding with the West about what we're all going to agree to rule out in terms of interference in the other's domestic affairs,” Beebe said. Critical to these objectives is dialogue with Putin, which Beebe says Washington has not done enough to facilitate. U.S. officials have stated publicly that they do not plan to meet with Putin. The U.S. rejected Putin’s most statements of his willingness to negotiate, which he expressed in an interview with Tucker Carlson in February, citing skepticism that Putin has any genuine intentions of ending the war. “Despite Mr. Putin’s words, we have seen no actions to indicate he is interested in ending this war. If he was, he would pull back his forces and stop his ceaseless attacks on Ukraine,” a spokesperson for the White House’s National Security Council said in response. But neither side has been open to serious communication. Biden and Putin haven’t met to engage in meaningful talks about the war since it began, their last meeting taking place before the war began in the summer of 2021 in Geneva. Weiss says the U.S. should make it clear that those lines of communication are open. “Any strategy that involves diplomatic outreach also has to be sort of undergirded by serious resolve and a sense that we're not we're not going anywhere,” Weiss said. An end to the war will be critical to long-term global stability. Russia will remain a significant player on the world stage, Beebe explains, considering it is the world’s largest nuclear power and a leading energy producer. It is therefore ultimately in the U.S. and Europe’s interests to reach a relationship “that combines competitive and cooperative elements, and where we find a way to manage our differences and make sure that they don't spiral into very dangerous military confrontation,” he says. As two major global superpowers, the U.S. and Russia need to find a way to share the world. Only genuine, long-term planning can ensure that Washington will be able to shape that future in its best interests.](https://responsiblestatecraft.org/media-library/following-a-largely-preordained-election-vladimir-putin-was-sworn-in-last-week-for-another-six-year-term-as-president-of-russia.jpg?id=34283894&width=1245&height=700&quality=90&coordinates=0%2C77%2C0%2C77)
