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Economist and Fellow in Russia and Eurasia at Chatham House Timothy Ash Harsh criticism of the G7 summit’s decision to freeze Russian funds.
Last week’s summit in Italy promised a $50 billion loan to Ukraine, secured by frozen Russian funds. The United States in particular pressured other G7 countries to transfer all the frozen funds to Ukraine, but no agreement was reached.
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European G7 countries are particularly fearful of Russian retaliation. The European Central Bank has also expressed doubts about the use of frozen funds. Its CEO Christine Lagarde It warned that the credibility of financial institutions was at risk. The central bank also worried about the project’s impact on the common currency, the euro.
In his analysis for The Syndicate, Timothy Ash reminds us that if Ukraine is to defeat Russia and rebuild after the war, it will require vast sums of money, probably more than Western voters and politicians are willing or able to provide.
“Russia’s frozen reserves could tilt the war in Ukraine’s favor and significantly reduce the financial burden on Western taxpayers. Still, opponents of a takeover fail to comprehend the harsh economic realities. Current levels of Western support are simply not enough to help Ukraine win,” he said.
Ashe estimates that the West currently spends about $100 billion a year, or nearly $8.5 billion a month, to sustain the war in Ukraine. For Ukraine to truly challenge Russia, the West would have to raise its allocations to about $150 billion a year, or about $12.5 billion a month.
“what if Donald Trump If Russia wins the US presidential election, will current US support for Ukraine end? Europe may be unwilling or unable to make up the annual funding gap. However, opponents of Russian asset expropriation do not offer alternatives or consider the consequences of Ukraine’s financial failure,” Ash said.
He continued: “A failure in Ukraine would bring higher social, political and economic costs to Europe in the form of large refugee flows, greater security risks and hundreds of billions of dollars in additional annual defence spending.”
Ashe said the allegations of illegal use of frozen funds were not true. He also did not sign off on the ECB’s concerns about the state of financial institutions or the common currency, the euro.
“The choice is clear. Unless all frozen Russian assets are turned over to Ukraine, Ukraine will lose the war and the cost to the West will be much higher. There is no other logical choice. G7 leaders should stop making excuses, stop being dishonest with their taxpayers, and get this done now.”
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