Ukrainian Urban Recovery (part 3): Recovery Funding Challenges and Evolving Solutions

Written By R .

(A continuation of discussions drawing on Brutal Catalyst: What Ukrainian Cities Tell Us about Recovery from War to be released by KeyPoint Press in autumn 2024)

The line between imposing crippling restitution for beginning a war and appropriate demands on guilty parties can be a fine one. World War I demonstrated too clearly the consequences of being ruled by vengeance when imposing reparations. World War II differed significantly for several reasons. The Allied victors recognized the counterproductive consequences of overly severe mandates (well, most of them anyway). The governments that initiated the war were effectively no longer existent in the cases of Germany, Italy, and Japan, unlike the case a generation before. That makes the current situation in Ukraine more akin to the First than Second World War. The Russian government responsible for initiating the conflict in 2014 Crimea and Donbas and reheating it in 2022 remains in power. Less like WWI, it has significant economic and military facilitators that remain on the sidelines, China, Iran, North Korea, India, and Belarus among them. The nature of this support is likely to prove fundamentally different than that from those supporting Ukraine, however.

The EU, the US and other individual nations, the aid community, and others are already actively supporting Ukraine’s recovery and have committed to continue doing so in the long run even as the war wages, the inconsistency of American politics and feeble excuse for Germany’s significant backing away from commitments notwithstanding. The character of this support for Ukraine is not without its drawbacks, however. Much is in loan form. This means the foundation for Ukraine’s post-hostilities recovery is to an extent more sand than solid. Still, some of the amounts come with promise of a review and possibility of being forgiven (effectively becoming grants). Lenders have also shown flexibility in loan conditions, recently agreeing to restructuring of over $20 billion in debt that significantly reduces the total owed.

There is another component of repayment that now and again reemerges in media coverage: drawing on frozen Russian assets to redress Ukrainian debt. This possibility underlies Germany’s reported cutback to 50 percent of its former aid commitment, the country’s leadership claiming the estimated $50 billion from interest on the Russian withholdings should compensate. [Apparently Germany considers that it can claim such an “exchange” is justified even as other European Union (EU) members maintain their obligations.]

This possibility of drawing a $50 billion from interest on frozen assets is just that: a possibility. It has been under consideration by the EU for months and, significantly, that consideration applies only to interest from the frozen assets, not the principal. The difference is significant. Though estimates of the total value of frozen Russian assets vary considerably (as do so many statistics from the ongoing conflict), being able to draw on the $411 billion the World Bank estimated in mid-2023 or $282 billion estimated by another source as of early 2024 would dramatically increase funds available for recovery. Taking from the principal is thought by too many to possibly threaten the international economic order. The concern is understandable; if abused, seizing personal assets could be justified for reasons less valid than is the case with Russia’s unquestionable aggression in Ukraine.

From another perspective, the reticence smacks of irony given how blatantly Russia has repeatedly flaunted a variety of international standards from 2014 to the present in Ukraine alone. Seizing vice only freezing assets would not be without precedent. Britain and France joined the US in putting Iraqi funds into escrow in 1990 to pay damages to invaded Kuwait.

Another argument supporting seizure rather than merely freezing assets: The wealthier—those more likely to have their assets affected—have greater potential to influence a country’s leadership or see it replaced altogether. Finding one’s millions or billions at risk of disappearing forever is something of a motivator. Those suffering an economic pinch and resultantly bringing pressure to bear include Serbia’s rich late in the 20th century.

A similar phenomenon may have precipitated the end of fighting in 2014 Gaza when the Israeli Air Force struck apartment buildings occupied by the wealthier, occupants having had enough after experiencing the conflict’s worst firsthand.

Whether and to what extent the EU or other bodies will eventually permit drawing on the principal of frozen assets is a long way from resolution. Ukraine, however, is already reportedly doing so from such assets within Ukraine proper.

We can but touch on the complicated nature of outside funding committed to Ukraine’s recovery. Suffice it to say that such aid—both for meeting immediate requirements and that destined to support long-term recovery—comes in myriad forms and with myriad conditions. Some forms strengthen the country’s foundation underpinning recovery needs. Others, as mentioned above, threaten to soften that bedrock if not intersperse it with quicksand. Nor is “hard” aid—that in the form of funds, weapons, physical infrastructure projects, and other money-dependent assistance—the only significant support influencing Ukraine’s future. “Soft” aid can significantly enhance the pace and character of recovery. EU and other nations not demanding the immediate departure of the millions of Ukrainians who fled their country in response to war once their refugee grace period expires is but one example. Extending the right to stay assists Ukraine by not further burdening the country’s economy with a sudden influx of returnees in need of housing and employment, both often in short supply.

Now to answering the last blog’s history challenge and presenting another:

 

Answer to Normandy trivia question 2 (Names in bold were there): Which six of the following were directly involved in the Normandy invasion on D-Day, June 6, 1945?

  • Ernest Hemingway (author)

  • John Wayne (actor)

  • F. Scott Fitzgerald (author)

  • Alec Guinness (actor)

  • Henry Fonda (actor)

  • Ted Williams (baseball player)

  • David Niven (actor)

  • James Doohan (actor, "Scotty" on Star Trek)

  • Michael Caine (actor)

  • JD Salinger (author)

  • Yogi Berra (baseball player)

  • Leonard Nimoy ("Spock" on Star Trek)

More detail for those interested:

  • Hemingway: Went ashore briefly as an observer/author/correspondent…or perhaps not. * Regarding Hemingway's D-Day experience, the below source says he never left the landing craft on which he was riding, but another that I am familiar with says he did...briefly.): https://scholar.lib.vt.edu/VA-news/VA Pilot/issues/1994/940606/06040030.htm

  • Alec Guinness: Was manning a British landing craft

  • David Niven: Served as a British Commando

  • James Doohan: Doohan was with the Royal Canadian Artillery and landed on Juno Beach. He was shot by a Canadian sentry the night of June 6, 1944. Six bullets hit him. One in the chest was stopped by a cigarette case. Four others struck his leg and one his hand. He lost the middle finger on his right hand as a result. That's why Star Trek kept the hand off-screen aside from several episodes in which it appeared, apparently in error (though one source says it sometimes was deliberately shown, but with a prosthesis). See https://www.snopes.com/fact-check/james-doohan-d-day/, which provides further (and at times conflicting) information. The website also identifies the episode in which his hand is mistakenly shown along with a photograph: "The Trouble with Tribbles."

  • JD Salinger (Infantryman who went ashore at Utah Beach)

  • Yogi Berra (in ship offshore that fired rockets in support of the landings)

  • Note: Henry Fonda was not at Normandy on D-Day, though some sources mistakenly claim he was. Fonda had previously been assigned as quartermaster to the USN destroyer USS Satterlee (DD-626), which provided naval gunfire support during the invasion. However, Fonda had been reassigned to the Pacific prior to D-Day. From an article by Captain Alexander G. Monroe, U.S. Naval Reserve. “Henry Fonda and the U.S. Navy,” Naval History Magazine 5, No. 1 (April 1991),https://www.usni.org/magazines/naval-history-magazine/1991/april/henry-fonda-and-us-navy: The Satterlee’s executive officer, Lieutenant “Cassell recalls that the Satterlee ‘was the first Allied warship within gun range at Omaha Beach. . . . Fonda would have liked that.’ That was not to be, however because at 0745 on Thursday, 2 September 1943…’Fonda, H.J., 562-62-35, QM3/c, USN, transferred to local receiving station for further transfer to Commandant 3rd Naval District for assignment by Bureau of Naval Personnel.’ He would be reassigned to the Pacific where “Fonda’s duties focused on air operations, specifically the interpretation and evaluation of masses of photographic and other intelligence material required to carry forward the invasion of the Marianas and later Iwo Jima.”

For more on some of these and other famous individuals (e.g., Medgar Evers and John Ford) at Normandy on June 6, 1944, see:

Normandy trivia question 3:

The five landing beaches at Normandy were named (from west to east), Utah, Omaha, Gold, Juno, and Sword. Juno was not the initial name for a beach. Why was it changed?

R .
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Ukrainian Urban Recovery (part 4): Ukraine and the unwavering character of Russian occupation
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Ukraine Urban Recovery (part 2): Fast-Tracking Urban Recovery