Alright, Who's Gonna Pay for This?

A common analysis of the Ukraine War is that Putin overestimated the ability of his military to cow the Ukrainians into submission, and as a consequence a humiliated and enraged Putin has decided that what he can't have, he'll raze to the ground. Then, when he is able, he will install a puppet government, declare victory, and withdraw most of his troops.

That's a pretty bleak scenario, to be sure. Maybe he realizes he will never be able to set up a sham government, and will withdraw once the country is reduced to cinders. No less bleak.

Mariupol Theatre (Daily Beast)

At the Brookings Institute, economist Robert E. Litan suggests a way to help Ukraine rebuild: use Russian money.

According to the most recent data supplied by Russia’s central bank as of June 30, 2021, Russia’s foreign currency reserves totaled $585 billion, though not all of this would be accessible to pay for damages. That’s because Russia holds a good portion of the total in gold at home (22%), a substantial amount of renminbi in China (14%), and some in international institutions (5%). Subtracting these amounts leaves about $350 billion in “available reserves” for distribution—mostly held by France (12%), Germany (10%), Japan (10%) and the U.S. (7%), with the rest scattered among many other countries.

In the past, reparations have been paid after hostilities ended by the aggressor country—that was Germany in the first two world wars. Now, the fact that many countries already have control over Russia’s holdings of foreign currency means that, in effect, reparations for the Ukrainian invasion have been pre-funded by Russia itself. This is an admittedly unique circumstance, but there is a basis in international law for enabling nations that hold these reserves to commit them to pay for damages.

Okay, the first thing we need to say is, "Watch out for the law of unintended consequences." But it's an interesting idea, and there's an added appeal: If Team USA/Europe announces this plan beforehand, it could very well make Putin reconsider the wisdom of his scorched earth strategy. The less he destroys, and the sooner he gets out, the less he has to pay.