What’s the price of “Peace on Earth”? In Ukraine alone, peace requires billions of dollars — and courage. More than wistful holiday wishes for peace are needed to get to peace on this planet.
The remarkably good news is that in Ukraine, the European Union last week gave the world a priceless Christmas gift.
Let me explain.
Our government is, shamefully, is no longer a reliable ally for Ukraine. So it’s rightly fallen on the 27-member European Union to step into the breach.
In urgent need of help to defend itself from Vladimir Putin and rebuild the nation he’s shattered, Ukraine will get a $105 billion “loan” from the EU during the next two years. It won’t have to be repaid unless Putin pays reparations to Ukraine. No one expects Putin to agree to pay reparations.
The European Commission, the EU’s executive branch, at first bravely proposed that Ukraine get an interest-free loan using some of the $246 billion (210 billion Euros) of frozen Russian assets invested in European banks.
“The proposal is to take these cash balances (from Russian assets) to give a loan to Ukraine that Ukraine has to pay back if Russia pays reparations. And therefore, it’s a legally sound proposal,” argued commission president Ursula von der Leyen.
But that proposal failed — for now. So the EU agreed to take on a “loan” guarantee that, in effect, gifts Ukraine the EU’s own money.
Most of Russia’s frozen funds are held in Brussels at Belgium’s Euroclear, a central securities depository. The rest is in private banks in France, Germany, Sweden, Cyprus and Belgium.
Russia’s money now lies safely beyond reach not only of Putin but of our own kleptomanic president, who recently cooked up a “peace” deal with Putin that audaciously included splitting the frozen money between Russia and the United States to use for their own benefit. These two worthies did not inform Ukraine of their scheme.
It’s Ukraine that’s the injured party here. It has an unassailable moral claim on Russian funds to repair the devastation Putin has wrought. No peace deal that spares Russia from paying reparations for damage it has done is acceptable.
Sanctioned funds
When Putin invaded Ukraine, the European Union imposed sanctions on Russia. The Russian Central Bank’s $246 billion deposited in EU banks was taken hostage, not to be released until Putin ends his invasion and pays reparations to Ukraine.
But the original freeze was good only for six-months and had to be unanimously agreed to by all 27 EU nations twice a year. Hungary, Czechia and Slovakia were peeling off. And Belgium, fearful of loss of investor confidence in its banking system and of Russian retaliation, was unwilling to agree to a freeze-backed loan unless every member agreed to share Belgium’s risks. A non-starter. But the commission did trigger Article 122, a workaround to at least keep Russian funds indefinitely frozen.
It’s an emergency mechanism the EU used during the Covid pandemic — and during the energy crisis that ensued when Europeans stopped buying Russian gas and started buying it from Norway, which is not in the EU.
Norway’s trillion-dollar sovereign oil fund reportedly grew by 6% as a result of the EU’s wartime boycott of Russian gas. Some critics call Norway’s windfall “war profiteering.”
Article 122 requires a majority vote and bypasses the European Parliament. That allowed the commission to impose the indefinite freeze that bars any distribution of these funds to anyone until Russia ends the war and pays reparations to Ukraine.
The commission’s justification for imposing the indefinite freeze on Russian funds is that Russia’s invasion of Ukraine is causing a “serious economic impact” on the EU in the form of sabotage, hybrid drone attacks, disinformation campaigns, supply disruptions and lower investment and consumer spending.
“Preventing that funds are transferred to Russia is urgently required to limit the damage to the Union’s economy,” the commission said.
Repaying the debt
For eight decades, Europeans have enjoyed American military protection. This allowed them to spend their own money on generous social safety net protections for their citizens, protections denied to American taxpayers, who have instead been paying the lion’s share of the bill for Europeans’ national security.
How is this a justifiable arrangement? Hello?
Even at this late date it remains unclear whether Europeans fully grasp that if Ukraine capitulates, they should expect that Russia’s border eventually will move into the heart of Europe. Even Christine Lagarde’s European Central Bank, asked by the EU Commission to guarantee the loan, refused, citing lack of legal authority.
Meanwhile, calls for Norway to use its “war profits” to guarantee the loan grew. It’s a financial risk that wealthy nation’s citizens hardly would notice even if they had to pay back the whole loan. But what Norwegians, who already live on Russia’s border, surely would notice is the unpleasantness that would follow if Ukraine capitulates — as Norway itself had to do during World War II.
I was among Norwegians liberated from Nazi rule by American taxpayers and by American soldiers, hundreds of thousands of whom paid for my freedom with their lives.
Likely no surprise, then, that I believe it’s imperative that not just Norway but all European nations rescued from Hitler now summon the testicular fortitude to step up and pay that debt of freedom forward by rescuing Ukraine — and themselves — from Putin.
Happily, it looks as if the EU agrees.
Solveig Torvik lives in Winthrop.
