The UK wants to follow the example of Canada and seize the assets of Russians in the UK in order to give them to Ukraine, Liz Truss has said.
It comes as the foreign secretary is due to give a speech on Monday to a Ukraine reconstruction conference in Lugano, Switzerland, which will be attended either in person or virtually by most of Ukraine’s senior political leadership.
It is estimated that more than 120,000 homes in Ukraine have been destroyed during the Russian invasion, creating the need for billions in income to restore the country economically and make it a Europe-faced economy.
Truss told MPs last week she was supportive of the idea that the government could seize frozen Russian assets in the UK and redistribute them to victims of Russia’s war in Ukraine.
She said: “I am supportive of the concept. We are looking at it very closely. The Canadians have in fact just passed legislation This is an issue that we are working on jointly with the Home Office and the Treasury, but I certainly agree with the concept. We just need to get the specifics of it right. ”
She said the initiative would “most probably” need legislation but not necessarily.
The funds seized could be supplied either to individuals in a form of reparations or to the Ukrainian state. At present the UK can suspend Russian assets under the Economic Crime Act for 56 days and roll over the suspension for a further 56 days. In that period the owner of the asset cannot benefit from the asset in any way.
In her speech to the conference, Truss will claim the UK will position itself as Ukraine’s key partner in the recovery process and claim it has already offered $ 1.5bn to the country through multilateral loan guarantees and more than £ 100m in bilateral support.
She will say: “Ukraine’s recovery from Russia’s war of aggression will be a symbol of the power of democracy over autocracy. It will show [Vladimir] Putin that his attempts to destroy Ukraine have only produced a stronger, more prosperous and more united nation.
“The UK is resolute in its support of Ukraine’s territorial integrity and will remain at Ukraine’s side as it emerges as a strong, thriving and cutting-edge democracy. We have led on support for Ukraine during the war and will continue to lead in supporting the Ukrainian government’s reconstruction and development plan. ”
The Foreign Office said: “Humanitarian assistance and de-mining programs will help rebuild villages, towns and cities, and in the longer term the UK will share economic and financial expertise to transform Ukraine into a global hub for investment, enterprise and cutting-edge technology. The UK will champion the recovery of the city of Kyiv and the Kyiv region, at the request of President Volodymyr Zelenskiy. ”
In practice, the scale of the reconstruction will depend on the outcome and length of the war, and whether eastern Ukraine – where there has been the worst devastation – is returned to Kyiv or remains in Russian hands.
About 6.4 million Ukrainians are estimated to have left the country, while a further 6 to 7 million citizens have left their homes and relocated to western parts of Ukraine. The cost of the war is estimated at $ 1tn if it lasts until the end of the year. The International Monetary Fund has estimated Ukraine’s balance of payments gap until June to be roughly € 14.3bn ($ 15bn).
One of the goals of the conference will be to sketch out a vision of a Ukrainian economy that dovetails with Europe, providing specialisms in agriculture, renewable energy and technology sectors. One of the most sensitive issues will be a program of de-oligarchization and how to entrench powerful anti-corruption institutions at a time when large flows of money from the US and Europe are likely.