Finance

Freeland says it’s ‘entirely appropriate’ to use seized Russian assets to rebuild Ukraine

Ottawa is currently creating a legal framework for the seizure of Russian assets

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Finance Minister Chrystia Freeland said Ukraine needs financial support to rebuild in light of the war — and Russia should foot the bill.

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“Ukraine’s financial needs are huge, the needs for the rebuilding are huge, and it is entirely appropriate for the aggressor to help pay for that rebuilding,” Freeland told reporters on call from Munich, Germany on May 20.

The comments followed a G7 meeting at which Freeland and her counterparts from the United States, Japan, Germany, France, the United Kingdom, Italy agreed on US$9.5 billion in Ukraine, pushing the total the seven democratic powers have committed since Russia’s invasion in February to about US$20 billion, according to Reuters.

Freeland said the Canadian government is currently creating a legal framework for the seizure of Russian assets, and suggested those assets could then be sold to finance the rebuilding of Ukraine.

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“When we look at the huge cost of rebuilding Ukraine, what is the best source of that funding?” the minister said. “Should those costs be paid by the devastated people of Ukraine themselves? Should those costs be paid by Canadians? I think it is entirely appropriate for those costs to be paid in part, at least, by these Russian assets.”

When asked whether she felt that the seizure and sale of Russian assets constituted theft, Freeland responded that there was a strong moral and practical justification for Ukaine’s allies to claim the assets, but added that Canada would need to proceed “carefully and thoughtfully.”

In creating asset seizure legislation, “Canada has an opportunity here to lead by example and show what can be done,” Freeland said.

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Freeland went on to announce an additional $250 million loan from Canada to Ukraine, which will be administered by the International Monetary Fund (IMF). The loan brings total aid provided by Canada to $1.9 billion.

“In order to win the war, Ukraine needs, urgently, further financial support from the world democracies,” she said.

The loan announcement follows G7 talks among world leaders in Bonn, Germany, about global issues including climate change, inflation, and the economic recovery following the pandemic.

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“We also discussed further support for Ukraine, and additional steps we need to take together to hold Russia accountable on Ukraine,” Freeland said. “The issue of the seizure of Russian assets and using them to help pay for the reconstruction of Ukraine was an issue that we discussed at some length.”

Freeland added: “The G7 countries are determined to continue targeting the ill-gotten gains of Russian elites around the world through the Russian Elites, Proxies, and Oligarchs Task Force, which is a chief government initiative.”

The task force was established in March by the G7 and Australia. Ministers pledged to, “prioritizing our resources and working together to take all available legal steps to find, restrain, freeze, seize, and, where appropriate, confiscate or forfeit the assets of those individuals and entities that have been sanctioned in connection with Russia’s premeditated, unjust, and unprovoked invasion of Ukraine.”

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In spite of the task force and other efforts made by the international community to fight back against Russian aggression, U.S. Treasury Secretary Janet Yellen said on May 17 that she was underwhelmed by the support that had been offered to Ukraine to date.

“Eventually, Ukraine will need massive support and private investment for reconstruction and recovery, akin to the task of rebuilding in Europe after 1945,” she said, referring to the Marshall Plan, a $12-billion package organized by the U.S. to rebuild Europe following Second World War.

“Ukraine will have to take this one step at a time, but we can help today and acknowledge and prepare for what is coming,” Yellen said. “What’s clear is that the bilateral and multilateral support announced so far will not be sufficient to address Ukraine’s needs, even in the short term.”

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