The Frozen Conflict

Europe must act now, says the U.S. Financial Services Chair James French Hill. He recommends that the European Council transfer the Russian assets held by European countries to a separate escrow account, indemnify these countries against Russian retaliation, and then allot the seized Russian funds to Ukraine. Just ‘three immediate steps’ and Europe will free Ukraine and the world from catastrophic financial losses and Russian aggression. Like taking candy from a baby!

Europe is affected by the prolonged Russia-Ukraine war. Their situation has worsened as a result of the Trump tariffs threat, potentially leading to an economic downturn. They are already facing challenges limiting their debts, reducing government deficits, and are struggling to secure €500 billion for their own safety and the Re-Arm plan. When they have their plate full, can they be expected to undertake such bold steps without support from the United States?

Three years ago, Europe froze Russian assets worth €260 billion (approximately Rs 26,08,580 crore). According to European regulations, they are not obligated to pay interest on frozen assets. However, Europe continues to collect heavy taxes, even though the interest on such frozen assets will not be paid. It is estimated that a minimum of €3 billion in post-tax interest accumulates annually on the immobilized Russian money held in European banks. It is a significant windfall for Europe as these extraordinary revenues will never be transferred to Russia, even after the war ends and Russian assets are released. Consequently, Europe is all set to protect and defend. They have decided to utilize 90 per cent of their extraordinary profits for the “European” Peace Facility and only 10 per cent for Ukraine. In other words, in the name of Ukraine, they will arm themselves and offer “loans” to Ukraine that will be repaid using the interest from the frozen Russian assets - at no cost to European taxpayers.

In the case of principal state assets, Europe is bound by investment treaties with Russia/Soviet. As a result, seizing the frozen Russian assets will attract massive financial penalties and also undermine the credibility of the bloc. Furthermore, it will set a precedent that would allow pro-Russian countries/entities to seize European assets in return. Therefore, Europe would continue to freeze the assets but not freeze to seize them.

The World Bank estimates that restoring Ukraine will require an investment of €500 billion over the next decade, an amount that parallels what Europe needs for its security! Thus far, Europe has claimed to have spent €158 Billion for the Ukraine Project. Regarding US aid, during a recent conference with Macron, Trump claimed that the US had spent $300 billion on support for Ukraine. He pointed out the “big difference” between grand US aid and European loans. And argued that American taxpayers, like those in Europe, should be able to recoup their contribution to Ukraine.

Take a closer look at U.S. aid data: the U.S. DoD states that $182.8 billion has been “appropriated” for Operation Atlantic Resolve, while the Ukraine-aid bills passed in the past three years sum up to $175 billion! Meanwhile, Trump’s assertion of $300 billion corresponds to the Russian money locked in European vaults. Though these figures do not align, reports on the utilisation of funds are not hard to believe. The news reports suggest that a significant portion of this aid has been spent in the U.S. itself to keep the U.S. war industry running while Ukraine continues to struggle on the battlefield. Furthermore, with the recent Minerals deal, the U.S. is set to claim 50 per cent of Ukraine’s future revenues from natural resources, including its rare earth minerals, gas, and oil. We all know that Daddy is good at cherry-picking.

At the 28th St Petersburg International Economic Forum last month, Vladimir Putin said, “In my view, the Russian and Ukrainian people are essentially one people. In that sense, we see Ukraine as ours. We have never denied the Ukrainian people’s right to independence and sovereignty...At the same time, the foundation for Ukraine’s independence and sovereignty was clearly established in its 1991 Declaration of Independence, which explicitly states that Ukraine is to remain a non-aligned, non-nuclear, and neutral state….We called for the withdrawal of Ukrainian forces from the regions where the local population had clearly expressed their desire not to remain within Ukraine. These people sought either independence or integration with Russia.”

Europe wants its breadbasket, and the media reports suggest that Western entities are acquiring Ukrainian farmland on a massive scale. Meanwhile, Trump wants minerals for its Golden Dome and the MAGA trumpet to play all along. Volodymyr Zelenskyy has lost everything for yet another Neo-Western dream. Putin seems stuck in 1991, reclaiming oblasts and repeating Baker’s words, “Not an inch eastwards” “Not an inch eastwards.”

Putin has not only taken the Ukrainian territories, he has undertaken massive infrastructure projects there to strengthen their ties with Russia. Over the past two and a half years, he has reportedly built roads, schools and hospitals and is said to have done more than any Ukrainian government has in the past 30 years.

If the West insists that Crimea and other territories be returned, Putin would demand a reversal of NATO’s expansion to 1997! At St Petersburg, Putin said, “There is an old saying, not quite a proverb, but a long-standing principle: wherever the foot of a Russian soldier steps is Russian land.” The peace seems far or never.

(The writer is a foreign affairs expert.)