How will the West fund Kyiv’s defence?

Ever since Russia invaded Ukraine, some £60 billion has been committed in aid and military equipment to the defenders. Western leaders have assured Kyiv that it will be supported for however long it takes to push back the aggressor. Yet almost two years into the war, that resolve seems to be weakening, colliding with domestic political realities and the pull of the Middle East conflict on resources, especially American. 

A long-running dispute over the budget in Washington has led to an effective Republican veto over further help for Ukraine. The White House has just released further US military aid from Pentagon stocks worth some £200 million. But without the fresh approval of Congress, that is the final tranche from the Americans, while aid from Europe is slowing. A £40 billion EU package was blocked by Hungary earlier this month. 

This comes at a time when Ukraine has a record deficit and is running out of equipment while Russia rearms ahead of launching an expected counter-offensive in the spring. 

There is an obvious alternative source of funds – the $300 billion of Russian assets frozen when the invasion started. Confiscating these, which include central bank funds, would be a huge step to take and has so far been resisted by democratic leaders. 

It risks playing into Russia’s – and China’s – hands by giving the impression that the international financial system is based not on the rule of law, but on the whim of Western governments. Moreover, under international law, such a move needs a vote in the UN Security Council, a judgment by the International Court of Justice, or a post-war settlement. Each of those would require Russia’s agreement and Moscow would retaliate by confiscating any foreign assets. 

President Biden has, however, proposed establishing three working groups to see if a way through can be found. They would examine the legal issues; the method of applying such a policy and mitigating the risks; and how to best channel the support to Ukraine, culminating in a G7 summit in February to mark the second anniversary of the invasion. 

If the West is no longer prepared to bankroll Ukraine’s defence, what is the alternative beyond managing its inevitable defeat? Confiscation is fraught with difficulty but Western taxpayers may find it increasingly hard to accept an open-ended call on their cash while so much of the aggressor’s money lies dormant.