Anders Aslund writes:

In his grand work Capital, Thomas Piketty has established that the total capital of a country, including everything, such as land and minerals, is historically usually four times GDP, that is, $800 billion for Ukraine, and much of this capital persists.

The next question is how can this possibly be financed.

Ideally, it should be financed by Russia as war reparations.

Needless to say, the Kremlin is not likely to accept that voluntarily, but the beauty of the current situation is that Russia might not have a voice. Western countries have frozen a total of $316 billion of the Russian central bank’s reserves. Germany holds $96 billion, France $61 billion, Japan $57 billion, the US $39 billion, the United Kingdom $31 billion, Canada $17 billion, and Austria $15 billion.

These highly liquid funds should be confiscated and allocated to Ukraine’s reconstruction. The legal situation in each country varies, but presumably this will require new legislation in each of these countries.

A second source that should be available for Ukraine’s reconstruction are assets of sanctioned Russian oligarchs that have been frozen abroad. Total Russian private financial assets abroad are assessed at $1 trillion.

Almost all of this money is hidden in layers of often 20-30 anonymous shell companies. A fair assumption is that the assets that should be frozen amount to around $400 billion, but so far only about $50 billion has been frozen and much of it in jurisdictions that are no likely to be helpful, such as Switzerland, Cayman Islands and Jersey.

Again, each country would need to adopt a special law for the confiscation of such assets and their transfer to Ukrainian reconstruction.

The third source would be bilateral funding, primarily from the EU and the United States. The EU has already committed $100 billion to Ukraine and the U.S. have committed $54 billion this year.

Considering the nature of Russia’s war damage, the vast majority of the funding should be grants rather than loans. [Continue reading…]