Oligarchs Did Not Invade Ukraine. Why Are Governments Focused Upon Assets Of Individuals Rather Than US$340 Billion In Assets Central Bank Of The Russian Federation Already In Their Possession?
Oligarchs Did Not Invade Ukraine. So Why Are Government Officials Energetically Focused Upon Assets Of Individuals To Compensate Ukraine Rather Than US$340 Billion In Assets Central Bank Of The Russian Federation Already In Their Possession?
Not all wealthy individuals, regardless of their nationality, should be defined as an “oligarch” (defined by Oxford Dictionary as “a very rich business leader with a great deal of political influence.”). The word oligarch is derived from the Ancient Greek word oligarkhia, meaning the rule of a few.
In the public domain, net worth defines an oligarch. Behavior defines an oligarch. Influence (particularly political influence) defines an oligarch. How an individual uses the value of their wealth defines an oligarch. During the last two years, politicians, particularly in the United States, have been referring pejoratively to uber-wealthy individuals subject to United States jurisdiction as oligarchs along with individuals subject to Russian Federation jurisdiction and subject to Ukraine jurisdiction among other countries.
Two important questions:
If oligarchs subject to Russian Federation jurisdiction were so influential, then why did they not dissuade the government of the Russian Federation from ordering the armed forces of the Russian Federation to invade on 24 February 2022 the territory of Ukraine? They knew the decision would not benefit their commercial or personal interests.
If oligarchs subject to Russian Federation jurisdiction are so influential, then why have they not in nearing six months persuaded the government of the Russian Federation to cease the war in Ukraine given the substantial impact of global sanctions upon the commercial assets and personal assets of oligarchs?
This does not suggest or mean that the assets of oligarchs are immune from lawful freezing, from lawful confiscation, from lawful liquidation. This does suggest and mean that the assets of oligarchs must be reviewed lawfully, must be processed through the courts lawfully, and must permit defendants a lawful ability to challenge all decisions.
Taking assets of someone because they are of Russian descent and are wealthy may be a “feel good” moment, but that only reinforces interruption, misuse of the legal process to justify a political process.
On 22 February 2022, did any oligarch march into the territory of Ukraine either across the border from Belarus or across from the border with the Russian Federation?
The yachts thus far seized valued at US$50 million to U$600 million were not included in a naval task force attacking Ukraine from the Sea of Azov or the Black Sea or while transiting the Dnieper River.
The Boeing 787, Gulfstream VI, Challenger, and other general aviation aircraft seized did not participate in dropping bombs or as platforms for launching cruise missiles into the territory of Ukraine.
The residences seized in London, Paris, New York, Washington DC, and other cities were not the headquarters from which plans were developed to invade Ukraine.
True, most of the identified oligarchs are unsavory characters- and their wealth derives from less than transparent business practices and their commercial, economic, and political position and value is beholden to maintaining connectivity to the government of the Russian Federation. OK, they are not nice people.
But does being unsavory, having chosen unwisely in terms of decisions and friendships make an individual and their assets responsible for the impact upon Ukraine of the decision by the government of the Russian Federation to direct the armed forces of the Russian Federation to launch an attack into Ukraine from Belarus and the Russian Federation? No, it does not.
The armed forces of the Russian Federation are responsible for the destruction of infrastructure in Ukraine. The orders that resulted in the destruction originated from the government of the Russian Federation, specifically within offices in the Kremlin in Moscow. From Vladimir Putin, President of the Russian Federation.
Thus, there is only one party to whom the invoice for repairing the destruction of Ukraine should be delivered. Only one. The address is Office of the President, the Kremlin, Moscow, Russian Federation. Period. Politicians residing outside of Minsk (the capital of Belarus) and Moscow (the capital of the Russian Federation) do not, however, share this perspective.
The same logic supporting oligarchs not being responsible for the destruction in Ukraine is true for governments other than Belarus and the Russian Federation.
The United States, the twenty-seven member countries of the European Union (EU), the thirty member countries of the North Atlantic Treaty Organization (NATO), and international financial institutions should not be focus upon raiding the earnings of taxpayers to fund the reconstruction of Ukraine. Not at least until first the assets of the government of the Russian Federation have been exhausted. This means using all the approximately US$340 billion in accounts of the Central Bank of the Russian Federation frozen by governments.
The Central Bank of the Russian Federation assets are reported (with varying degrees of accuracy) as held (frozen) outside of the Russian Federation: Germany (US$55 billion), France (US$71 billion), Japan (US$57 billion), United States (US$38 billion), United Kingdom (US$26 billion), Austria (US$17 billion), and Canada (US$16 billion) among others. Approximately 34% of the assets are reported in Euros; 22% in Gold Bullion; 17% in Chinese Yuan; 11% in United States Dollars, and 6% in British Pounds. Surprisingly, in May 2022 the EU reported that the value of frozen Russian Federation Central Bank assets was approximately US$24.5 billion. Mr. Dimitry Peskov, spokesperson for the government of the Russian Federation, shared that confiscation and use of assets of the government of the Russian Federation for benefit of Ukraine would be “illegal, blatant, and of course requiring an appropriate response... It would be, in fact, outright theft.” And how would be defined the export by the government of the Russian Federation of commodities from Ukraine absent permission from the owners of the commodities?
Insanely, officials of governments and officials of international financial organizations are speed-racing one another to play upmanship in terms of whose taxpayers will be pressed to provide the most funding to reconstruction in Ukraine.
Here is an analogy: Someone who owes you money has funds in their checking and saving accounts and you have access to those funds. Rather than access and use those funds, you choose to use your credit card and incur high interest payments. Why would you do that?
This is their tortured logic: The Russian Federation has since 22 February 2022 earned approximately US$1 billion per day from the export of energy products- a considerable sum from countries having imposed sanctions upon the Russian Federation. Thus far, approximately US$140 billion. While the daily rate value of energy exports is expected by the EU and other countries to decline for the remainder of 2022, there is no guarantee of that result. There is approximately US$340 billion in Russian Federation assets frozen. The estimate for reconstructing Ukraine- meaning rebuilding on par with what existed, with reasonable upgrades ranges from US$100 billion to US$1.1 trillion (European Investment Bank estimate). Likely, the value will be US$400+ billion. Why is the first go-to sourcing from taxpayers outside of Belarus and the Russian Federation?
So, the armed forces of the Russian Federation invade Ukraine. Cause widespread damage. The government of the Russian Federation has received approximately US$140 billion and will seek and have returned the US$340 billion that has been frozen. Taxpayers in other countries fund reconstruction of Ukraine. The Russian Federation continues to export energy products. The armed forces of the Russian Federation are expected to retain portions of Ukraine- some newly acquired since 24 February 2022 and some acquired beginning in 2014. And politicians believe this outcome is logical and moral?
Approximately two months since the Brussels, Belgium-based European Commission (EC), the operational component of the EU, proposed emergency loans to the government of Ukraine valued at US$9 billion. Thus far, approximately US$1 billion has been agreed upon. The Federal Republic of Germany prefers grants to the government of Ukraine rather than loans; and it has already provided to the Washington, DC-based International Monetary Fund (IMF) non-refundable grants to the government of Ukraine valued at US$1 billion. The Kirchberg, Luxembourg-based European Investment Bank (EIB) continues to process a US$1.5 billion loan to the government of Ukraine; the EC seeks increased guarantees in case of a default. The government of Ukraine continues to seek approximately US$5 billion to US$7 billion per month for operational expenses.
According to the Bern-based State Secretariat for Economic Affairs (SECO) of the Swiss Confederation (Switzerland), since 24 February 2022 approximately US$6.8 billion in financial assets, residences, and property owned by individuals and entities subject to Russian Federation jurisdiction have been frozen.
According to the Brussels, Belgium-based European Union (EU) approximately US$20 billion in assets of the Central Bank of the Russian Federation and approximately US$14 billion in financial assets, residences, and property owned by individuals and entities subject to Russian Federation jurisdiction have been frozen in its twenty-seven member countries. EU-member countries have also reported blocking financial transactions valued at approximately US$200 billion.
However, on 18 July 2022, Mr. Didier Reynders, Justice Commissioner of the EU, reported that Austria, Belgium, Germany, France, Ireland, and Luxembourg accounted for 12.7 billion Euros (US$12.8 billion) of 13.9 billion Euros (US$14 billion) in assets subject to Russian Federation jurisdiction frozen since 24 February 2022 by the twenty-seven country members of the EU. “There are six member states that are doing the work. We have a situation where some member states provide us with a lot of information, others give us information about very low amounts, and it gets more complicated when certain countries don’t communicate.”
According to the government of the United Kingdom (England, Scotland, Wales, and Northern Ireland) the island of Jersey has frozen approximately US$7 billion in assets linked to Mr. Roman Abramovich, an individual subject to Russian Federation jurisdiction,
Denys Shmygal, Prime Minister of Ukraine (3/4 July 2022 in Lugano, Switzerland):
“It’s very important for the civilized world to give the signal to Russia, as aggressor- and to other potential aggressors in the future- to understand that unprovoked aggression should be paid by this aggressor. Russia should pay for this… Today, the direct infrastructure losses of Ukraine stand at over $100 billion. Who will pay for the renewal plan, which is already being valued at $750 billion?”
“Counting all the damage, it costs more than $700 billion. That is huge money. But we understand that some of it will be compensated from confiscated Russian assets.” He said that a significant source of funding for the recovery plan should be assets confiscated from Russian oligarchs.
“But some of it will come from our budget, some of it will be given to us by our partners, financial partners, and other money will be invested by businesses because recovery is always about business.”
US$300 billion to US$500 billion of frozen assets of the Central Bank of the Russian Federation, individuals, and entities subject to Russian Federation jurisdiction, held within EU-member countries, the United Kingdom, United States, and other countries should be directed for the reconstruction of schools, hospitals, and residences. “We propose to find (a) formula to create national and international legislation for (creating the) possibility of confiscation of frozen assets in case of unprovoked aggression.”
Volodymyr Zelensky, President of Ukraine (3/4 July 2022 in Lugano, Switzerland):
“The reconstruction of Ukraine is not a local project, is not a project of one nation, but a common task of the entire democratic world- all countries, all countries who can say they are civilized. Restoring Ukraine means restoring the principles of life, restoring the space of life, restoring everything that makes humans humans.”
Liz Truss, Foreign Secretary of the United Kingdom (3/4 July 2022 in Lugano, Switzerland):
We have led on support for Ukraine during the war and will continue to lead in supporting the Ukrainian government’s Reconstruction and Development Plan. This needs to be a new Marshall Plan for Ukraine and it needs to be driven by Ukraine itself. We will push for immediate investment and to drive economic growth because it’s absolutely imperative we get the Ukrainian economy going, we need to need able to support returning Ukrainians returning to Ukraine, we need to give people hope about the future, and we need to give them the means to be able to support themselves. Reconstruction should embed reform, modernisation, technology and transparency. The United Kingdom is very pleased to join the Joint Reconstruction Coordination Group.
It’s our view that it’s vital that that is open to partners right around the world, we need all of the free world supporting this effort. It must be open and comprehensive, and it must involve international organisations as are represented on stage at the moment. It must involve all of those who have been active in helping Ukraine defend itself and who back Ukraine for the long term through thick and thin, whatever it takes.
The United Kingdom has committed to host next year’s 2023 Ukraine Reconstruction Conference. President Cassis, we have a lot to learn from you, it’s been a fantastic conference so far. We are also exploring how we engage British business, tech companies and universities in that reconstruction effort, we’re looking at how we can use English and Scots law to ensure investors have the confidence to participate in the reconstruction effort, and we will use the might of the City of London and the European Bank of Reconstruction and Development which is based in London to make Ukraine one of the world’s top destinations for investment in 2023.
We think there is a real opportunity for Ukraine to near-shore manufacturing, agribusiness, technology, to be an extremely vibrant economy going forward. As the Prime Minister mentioned the United Kingdom is actively looking at how we legislate to seize assets from those who have contributed to this appalling war, it’s vitally important that we acquire those funds for the reconstruction of Ukraine.
The UK will be championing the recovery of the Kyiv region, in response to President Zelenskyy’s specific request from our Prime Minister for UK leadership. We believe that despite the appalling suffering, despite the terrible war crimes that have taken place, the devastation, and the human cost, that Ukraine will emerge stronger and more successful after this war. President Zelenskyy, you have demonstrated that Ukraine is a bastion of freedom and democracy, and it’s our duty as your friends and allies, as the free world, to do whatever it takes to support you.
Matilda Ernkrans, Minister for International Development of Sweden (3/4 July 2022 in Lugano, Switzerland):
“We have now pledged an initial SEK 70 million to help rebuild Ukraine following the horrific destruction caused by Russia’s war. This support can be used for mine clearance, initiatives to improve energy efficiency and regional decision-making. Sweden is a strong and long-term partner of Ukraine. We provide humanitarian support, macroeconomic support, arms and other defence materiel, and extensive civilian crisis management operations. Sweden has contributed approximately SEK 4.2 billion to Ukraine since the invasion on 24 February.”
Svenja Schulze, Minister For Development Of Germany (3/4 July 2022 in Lugano, Switzerland):
The Ukrainian recovery effort will not be “a project for one year or two,” with priority preparing homes for winter months. “There are huge opportunities for the German economy because Ukraine is a big country. It has a large population, and it’s of course interesting for an export nation like Germany to be represented there.”
Ignazio Cassis, President Of Switzerland (3/4 July 2022 in Lugano, Switzerland):
“According to the rules we have in the vast majority of democracies..., we can freeze assets, we can freeze in order to clarify where these assets are from… Now we can take a decision which is perfect for Ukraine but we create the possibility to take the same decision in many other possibilities and... give much more power to the state and away from the citizen.”
As part of bilateral cooperation with Ukraine, Switzerland will double its funding to approximately US$105 million by the end of 2023.
European Investment Bank
The EIB has committed approximately US$4.8 billion to Ukraine. The fund could be used to rebuild bridges, renovate energy, water, and sewage infrastructure, and expand services in cities housing refugees.