By announcing the development of its own Ukraine peace plan, Europe has
started to define a role for itself in the war. It must now go further by giving Zelensky a way out of the dilemma in which last week’s clumsy shakedown in the Oval Office has placed him.
Putin’s military violation of Ukrainian sovereignty is only partially accomplished. There is no evidence that he has abandoned his goal of complete control over Ukraine. Yet, in return for an illusion of protection against Putin, Trump
threatens to violate Ukraine’s economic sovereignty. And if Zelensky stands up to both he risks losing everything.
Trump’s immediate goal is to impose a ceasefire at any cost. Putin is offering no concessions. There would be no restitution of occupied lands; no return of kidnapped children; no credible security guarantees; and no serious capacity for Ukraine to defend itself
against renewed Russian aggression. This would be an unjust peace. It could not last. Putin would regroup and go again when he is ready.
Zelensky could never agree to such a capitulation. That’s why he rightly stood his ground in the Oval Office.
He will persist, even if Trump does not restore US support.
But
Trump also covets Ukraine’s minerals. He is trying to take control of these resources and acquire a punitive share of any revenues they might generate. He insists that a US business presence at an unspecified future time would by itself deter further Russian aggression (albeit that few civilian businesses deliberately put their employees in harm’s way, still less ask them to act as informal peacekeepers).
Zelensky must be reluctant to agree to that either. It is not clear if he has managed to defer the threat for now. The agreement he was to sign in Washington left for further negotiation the critical questions about control and share of revenues. But Trump may now demand more in return for restoring the flow of US arms and intelligence.
Trump has said that Putin holds all the cards.
Zelensky urgently needs a new card to play. His European allies can give him one.
European banks hold almost US$300bn in frozen Russian assets. They are already extending loans to Ukraine backed by the interest from these assets. But they have so far drawn back from mobilising the capital itself. It is now time for them to do just that.
A bad idea, apparently now being considered by European leaders, would be to threaten to seize the assets if Putin breaches a ceasefire.
Zelensky needs money today, not tomorrow. Stronger defences make the strongest deterrent.
Momentum is also building for the assets to be seized immediately. There is a case for that, and it is of course no less than Putin deserves. But given the outcome required it would not be the most effective use of these funds.
It would be an unnecessary surrender of moral high ground, which Putin would exploit. And
Zelensky will still need US weapons.
Trump’s
strange desire to stay on the right side of Putin may make him
more likely to block their purchase with “stolen” money.
It would be more astute to lend the assets to Ukraine, against a commitment that once a durable peace is established Ukraine would pay them back to Russia much as Britain paid back loans to the US after the Second World War. The funds would be used to procure a sustained supply of arms and materiel; to enhance Ukraine’s capacity to arm itself; and to underpin economic recovery.
Supported by this modern version of lend-lease, Zelensky would be better placed to withstand the loss of US support. The risk of military collapse would recede, and he could strike a better minerals deal with Trump. He would still have to make concessions in a peace process, but Putin would now be under pressure to do so as well.
Putin is already in a weaker position than Trump suggests. Inflation is running at more than 20 per cent, military spending is eating up more than 6 per cent of GDP, financial reserves are depleted. The Russian economy cannot cope indefinitely with these stresses.
Time is not on his side, and if Zelensky acquired a new war chest, the pressure on Putin to offer concessions would substantially increase. And having paid for his war by plundering Russia’s reserves, the possibility that the frozen assets might eventually be paid back would give him an added incentive.
Europe needs to show with decisive action that it is equal to an historic challenge. It
must remove the danger of a Ukrainian military collapse and
redirect the pressure of time from Zelensky onto Putin. A lend-lease loan of the frozen assets is the best and perhaps the only way to solve these problems and open a path to a just and durable peace.
www.morningstar.co.uk
www.telegraph.co.uk
www.independent.co.uk
