of The author is a Senior Fellow at the American German Marshall Foundation.
Basic moral values and historical precedent demand that the defeated aggressor pay for the war in Ukraine. Some supporters argue that reparations should begin immediately by seizing $300 billion in Russian government assets frozen in Western financial institutions.
But broad international legal protections by sovereign governments have left several G7 countries in particular embroiled in the often frivolous historical disputes over World War II reparations and the potential for unified action. The low means that such foreclosures are difficult to carry out. A more realistic approach would be to pay during a comprehensive peace agreement between Ukraine and a defeated Russia, as over time these funds could be released by the Russian government for legitimate purposes. may be pursued.
But a peace deal will take time and Ukraine needs money now. Fortunately, history shows ingenious ways in which the enthusiastic public can be harnessed to support a cause. Now is the time for European peoples to unite.
The relationship between a state’s ability to wage war and its ability to raise funds has been evident since the advent of the modern state. Wars deemed just and necessary often require direct financial support from the public. In World War I, the US Federal Government’s Freedom Bonds and the British Government’s War Bonds demonstrated the power of patriotism as investment advice to individual investors. With the majority of Europeans supporting financial aid to Ukraine and Kiev’s needs growing, the EU and European countries should directly use public goodwill towards Ukraine. Europe should follow Canada’s footsteps by issuing European bonds to Ukraine aimed directly at European retail investors.
The war in Ukraine is entering a critical stage. Despite heavy fighting, there are hopes that recovery and economic normalization in much of the country not directly affected by the war can be accelerated. The Western supply of heavy weapons confirms their confidence in Ukraine’s combat capabilities and eventual victory. Therefore, it is appropriate to start planning for the complete reconstruction of Ukraine. With the EU agreeing to start accession talks with Kiev and the US providing most of the military support, most of the future reconstruction costs of Ukraine should be borne by the EU and its member states. Europe is where new ideas for financial assistance to Ukraine are most needed.
The EU has pledged 18 billion euros to support Ukraine’s economy this year, of which about 10 billion euros will be raised in the form of “EU bonds”. become part of the euro. 2023. The Commission relies on a primary dealer network of 41 banks to sell EU bonds to a broad institutional investor base. Going forward, public support to Ukraine should be used to expand the investor base to include private investors.
Last year, the Canadian government showed the way. Launched a 5-year C$500 million Ukrainian sovereignty bond at a low denomination of C$100 to retail investors through a network of 10 Canadian financial institutions. Proceeds from the bonds will go directly to aid Ukraine via the IMF. But investors buy bonds equivalent to regular Canadian government bonds backed by Ottawa’s AAA rating and repaid by the Canadian government at maturity.
Since the Commission has already issued green bonds, Brussels will coordinate with its primary dealers (many of whom have large private banking operations in Europe) to sell EU-backed European bonds to European investors. There are no technical barriers to selling to individual investors. The Commission should announce this initiative for Ukraine now.
Of course, all of Europe’s common debt is politically controversial, and some member state governments and treasury ministries have turned the traditional sovereign feature of issuing bonds to private investors in times of war into European institutions. may be reluctant to adopt. If so, individual member countries should themselves imitate the Canadian retail bond proposal for Ukraine. Proceeds from such national bonds may be pledged bilaterally to the Government of Ukraine or other receiving entities in Ukraine. Alternatively, it could be used as a direct voluntary member state contribution to the EU’s Ukraine budget, similar to the proceeds of Canadian government bonds sent via the IMF.
The European people remain steadfast in their support of the Ukrainian cause. European governments and the EU should provide an additional direct route to contribute financially to the victory of Kiev and the reconstruction of Ukraine through European bonds.
