this The author is a senior fellow at the German Marshall Fund
Basic moral values and historical precedent dictate that the defeated aggressor should pay for the war in Ukraine. Some advocates argue that reparations should begin immediately, seizing a reported $300 billion worth of Russian government assets frozen in Western financial institutions.
However, the broad international legal protections of sovereign governments mean such expropriation will be difficult to enforce, especially as several G7 countries remain embroiled in trivial historical disputes over World War II reparations and are unlikely to act in concert. A more viable approach might be to seek payments during any comprehensive peace settlement between Ukraine and a defeated Russia, since over time these funds could be used by the Russian government for its legitimate purposes.
Still, a peace deal takes time, and Ukraine needs money now. Fortunately, history shows ingenious ways that can be used to engage an engaged public in support of a just cause. Now is the time to create a European People’s Bond.
The link between a country’s ability to wage war and raise money has been evident since the dawn of the modern state. A war deemed just and necessary often requires direct financial support from the public. In World War I, the Liberty Bonds of the U.S. Federal Government and the War Bonds of the British Government served as investment advice to retail investors, demonstrating the power of patriotism.as vast majority of europeans Supporting financial aid to Ukraine, the EU and individual European countries should directly capitalize on the goodwill of their people towards Ukraine as the needs of Kiev increase.Europe should follow suit Canada leads Issuance of Ukrainian European People’s Bonds directly to European retail investors.
The war in Ukraine has entered a critical phase. Difficult fighting continues, but reconstruction and economic normalization in large parts of the country unscathed by direct fighting are expected to accelerate. The supply of heavy weapons by Western powers underscores their confidence in Ukraine’s combat effectiveness and eventual victory. It is therefore appropriate to begin planning for the comprehensive reconstruction of Ukraine. Since the EU has agreed to start accession negotiations with Kiev, and the United States provides most of the military support, most of the future costs of rebuilding Ukraine should fall on the EU and its member states. New ideas for financial aid to Ukraine are most needed in Europe.
The European Union has pledged to provide 18 billion euros to support the Ukrainian economy this year, including plans to Around EUR 10 billion raised in the form of “EU bonds”, as part of the European Commission’s total bond issuance of EUR 80 billion for the first half of 2023. The commission relies on a network of primary dealers of 41 banks to market EU bonds to a wide range of institutional investors. Now it should use public support for Ukraine to expand its investor base and include retail investors.
Last year, the Canadian government showed the way.it publishes a Five-Year C$500 Million Ukrainian Sovereign Bond, with denominations as small as CAD 100, and is available to retail investors through a network of 10 Canadian financial institutions. Bond proceeds go directly to support Ukraine through the IMF. But investors buy regular bonds, the equivalent of Canadian government bonds, backed by Ottawa’s AAA rating and repaid by the Canadian government when they mature.
Since the Commission has already issued green bonds, there is no technical hurdle for Brussels to arrange with its major dealers, many of which have large retail banking operations in Europe, to market EU-backed European People’s Bonds to European individual investors. The committee should announce this initiative for Ukraine now.
Of course, all ordinary European debt is politically contested, and some member state governments and finance ministries may not like European institutions adopting the traditional sovereign characteristics of issuing debt to retail investors in wartime. If so, individual member states should replicate the idea of issuing Canadian retail bonds for Ukraine themselves. The proceeds of such National People’s Bonds can then be pledged bilaterally to the Ukrainian government or other receiving entities in Ukraine. Or, like Canadian bond proceeds passed through the IMF, they could be earmarked as direct voluntary contributions from EU member states to the Ukrainian budget.
The European public remains firmly behind Ukraine’s just cause. European governments and the EU should give them an additional direct channel to provide financial support for the victory in Kiev and the reconstruction of Ukraine through European People’s Bonds.