UK proposes to lend all frozen Russian assets to Ukraine

Foreign Secretary Cameron said Britain was ready to lend Ukraine all of the frozen assets of the Russian central bank until Moscow compensated Kiev.

Foreign Secretary David Cameron said on March 5 that frozen assets held by the Russian central bank in the UK would be used as collateral to force Moscow to pay reparations to Kyiv after the war ends.

"This is an opportunity to effectively utilize Russia's frozen assets, turning them into loans or bonds transferred to Ukraine. When Russia pays reparations to Ukraine, we will recover that money from Kyiv. This is a good way to handle it," Cameron said.

The UK's plan is seen as more radical than an earlier proposal from the European Union (EU), in which EU leaders wanted to transfer to Ukraine the profits from the $220 billion in frozen assets of the Russian central bank held by Europe. The estimated annual profit is around $4 billion.

"We are trying to unite the G7 and the EU on this issue. But if we cannot reach a consensus, I think we will continue with the option of working with our supportive allies," Cameron said.

British Foreign Secretary David Cameron outside 10 Downing Street, London on March 6. Photo: AFP

The British Foreign Secretary does not believe that the plan to convert frozen Russian assets into bonds or loans will damage London's reputation in any way.

The plan is expected to be a big help to Ukraine if the US Congress continues to block additional aid packages to Kiev. This money could help Ukraine get new money to buy weapons and cover its budget deficit. Ukraine estimates it needs $100 billion a year to maintain the war with Russia and about $50 billion a year to rebuild the country.

After Russia launched a war in Ukraine in late February 2022, the US, EU and their allies imposed a series of sanctions on Moscow to pressure President Vladimir Putin to end the war. One of them was to freeze about 50% of Moscow's foreign gold and foreign currency reserves, worth about $330 billion.

Observers say Mr Cameron's proposal has both advantages and disadvantages. The advantage is that frozen Russian assets would be guaranteed to be returned to the country if Moscow completes compensation payments to Kiev. The disadvantage of the proposal is that it is applying to the scenario of Ukraine winning the conflict and demanding compensation from Russia for the damage caused. However, this scenario is currently considered unfeasible, when Russia holds a greater advantage on the battlefield.

Thanh Tam (According to Guardian, AFP )

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