Interesting to read a Bloomberg article citing a German government official saying they don’t support the use of frozen Russian assets for Ukraine - the official has not even got the balls to go on record, but sneakily looks to brief against Ukraine behind the scenes. Is it a friend of Schroeder?
Germany has been wrong at every step of the way on Russia, and Ukraine, for a decade or longer. And it is absolutely wrong again on the issue of frozen Russian assets - an abundance of caution, as ever, which has been WRONG, WRONG, WRONG, each time when it comes to anything on Russia whether energy dependence on Russia, munitions, and now on financing. Germany will have to roll over. It will have to roll over as it has on Leopards, and will have to do on Taurus, unless it wants Red Army tanks again on the streets of Berlin.
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1. If Germany is blocking the use of the underlying immobilised Russian assets it has to explain how it is going to fund the $100bn annual cost of supporting Ukraine in war, and likely $50bn annual cost of rebuilding Ukraine. As is, the $61bn is still stuck in the US congress, and EUR50bn of EU money is blocked by Hungary. The real politik - German term - means Western taxpayers will not pay the full ticket.
And what happens when Trump comes back to power in 25?
And if we don't finance Ukraine now, it loses, and what does a Ukrainian defeat look like? Think thru that.
NATO, Ukraine to Meet Tuesday Over Russian Missile Strike
2. I sense here that Germany is terrified of going down the reparations route for fear of action by Poland et al against it for WW2 reparations. Understood, but then why should US, UK, French et al taxpayers pay Germany's ticket now on Ukraine, because of that? We don't owe WW2 reparations. Our taxpayers are being made to pay, because Germany does not want to use the obvious choice of frozen RU assets because of fears over WW2 reparations. So how about Germany pays the full bill for Ukraine now? And did Germany not get the big Marshall plan bail out after WW2, so it now needs to repay the favour, fortunately via the $300bn+ in frozen Russian assets.
3. G7 is calling for debt relief as part of the IMF support programme for Ukraine - but why should private creditors give debt relief when our governments are not willing to go after frozen Russian assets first? I say no debt relief unless frozen RU assets are tapped first. This should be a huge political scandal in Germany et al, that our governments want to pay Russia back in full, paying for it from tax payers and pensioners dollars.
4. Germany rants on about the rule of law - where was the rule of law when various German politicians and business leaders had their snouts in Putin's kleptocratic trough. Or for that matter where was the rule of law when the UK, Belgium or France, et al accepted the $300bn+ into their jurisdictions when everyone knew this was the profits of kleptocracy and corruption. One man's rule of law is another man's money laundering. And the fact that blind eyes were turned when this money came in is now exactly why the money now has to be paid to Ukraine - because we owe Ukraine.
5. The arguments around risk to reserves currencies is just bull - the message was already sent via immobilisation, so what is the difference to freeze, and confiscate? Then the question is if the $ and Euro, and Pound, Yen, Aussie, et al are out of bounds, where will China put its $3 trillion FX reserves? Same for Saudi et al. There is no alternative to the dollar, euro et al. But what will the status of these reserve currencies be if Russian tanks are rolling thru Ukraine, Poland and on to Berlin.
Reprinted from @tashecon blog. See the original here.
The views expressed are the author’s and not necessarily of Kyiv Post.
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