LONDON — Western countries pledged tens of billions of dollars to rebuild Ukraine on Wednesday, as leaders gathered at a two-day conference convened by the British government in the shadow of Ukraine’s counteroffensive against Russia.
But with the total cost of reconstruction projected to spiral into the hundreds of billions of dollars, the prospect of using confiscated Russian assets to pay for it emerged as a potent, if problematic, theme at the gathering.
Britain and the European Union are both exploring legal mechanisms to divert frozen Russian assets to Ukraine. Globally, these public and private assets are estimated to be worth at least $300 billion, a sizable chunk of the total reconstruction cost, which the World Bank currently estimates at more than $411 billion.
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While few legal experts question the right of countries to freeze foreign assets, some warn that confiscating a large amount of Russian funds could set a troublesome legal precedent and undermine confidence in financial markets.
The pledges, rolled out by Britain, the United States, and the European Union, sought to shift public attention, at least for the moment, from the battlefield to the years-long reconstruction of Ukraine that will follow the war.
“It’s clear Russia must pay for the destruction it inflicted,” Prime Minister Rishi Sunak of Britain said in opening the conference.
“As we’ve seen in Bakhmut and Mariupol, what Russia cannot take it will seek to destroy,” Sunak added. “They want to do the same to Ukraine’s economy.”
Speaking to the participants by video link, President Volodymyr Zelensky of Ukraine argued that there was economic opportunity in the ruins of his country. He thanked the donors but pleaded with them to start investing immediately.
“We must move from vision to agreements, and from agreements to real projects,” Zelensky said.
Britain announced assistance that includes $305 million of direct economic assistance and $3 billion in World Bank loan guarantees. The loans are intended to encourage an influx of private investment to rebuild Ukrainian cities and towns destroyed by Russian forces.
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The European Union laid out an ambitious package that would include $55 billion from 2024 to 2027. Most of the aid would be in the form of low-interest loans. The package must be approved by all 27 members of the bloc, however, and it may face hurdles.
“This plan could become an anchor for all international donors,” said Ursula von der Leyen, president of the European Commission. “This is what I mean when I say we are with Ukraine for as long as it takes.”
The United States announced $1.3 billion in additional economic aid, roughly split between funds to overhaul Ukraine’s heavily damaged energy infrastructure and to modernize ports, railways, and border crossings.
“As Russia continues to destroy, we are here to help Ukraine rebuild,” said Secretary of State Antony Blinken, noting that the package had bipartisan support in Congress. “Recovery is about laying the foundation for Ukraine to thrive.”
The United States has delivered more than $20 billion in economic assistance to Ukraine, Blinken said, as well as $2.1 billion in humanitarian aid. It is also the largest provider of military aid to the Ukrainian military.
Britain, which is also one of Ukraine’s largest military suppliers, is leveraging London’s status as a global center of finance and insurance to stimulate foreign investment, in part by trying to reduce the risks to investors.
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The $3 billion in loan guarantees to the World Bank extends over three years, Sunak said, and is backed by more than 400 companies from 38 countries, including Virgin, Sanofi, Phillips, and Hyundai Engineering.
The World Bank’s estimate of the reconstruction costs doesn’t cover the far-flung damage caused by the destruction of the Kakhovka dam in southern Ukraine this month. The price tag is so enormous — and is rising so rapidly — that it has renewed calls to confiscate Russian assets to pay for it.
“The Russian assets issue is the elephant in the room at the conference,” said Philip D. Zelikow, a historian at the University of Virginia and Stanford University who has written about Ukraine’s long-term recovery. “If we don’t use Russian assets, we simply won’t have nearly enough money to do it.”
Zelikow said reconstruction without Russian assets would require massive state outlays, which will be politically untenable in several countries, not least the United States. But for now, he said, the intense focus on private investment is postponing harder questions about the role of Russian money.
Ukraine’s government is already using confiscated Russian assets in its country to pay for rebuilding, according to its prime minister, Denys Shmyhal. Appearing at the conference Wednesday, he encouraged Western countries to develop legal mechanisms to allow them to confiscate assets frozen in their countries for similar purposes.
“Russia must pay for what it has destroyed,” Shmyhal said.
But the issue remains sensitive. The European Central Bank has privately warned Brussels that confiscating Russian funds or giving the interest earned on those accounts to Ukraine could undermine confidence in the euro and shake financial stability.
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If the United States were to do it, some say it would unnerve countries that hold large foreign exchange reserves in dollars. Treasury Secretary Janet Yellen warned in February of “significant legal obstacles” to it.