Reconstruction of Ukraine: the hunt for Russian money has already begun

There are Caesar cannons, Leopard tanks, Javelin missile launchers. And then assault rifles, light armored vehicles, mortars… Above all, there are the billions of euros and dollars that have flooded Ukraine since the start of the war. The fighting is far from over and the outcome of the conflict is still very uncertain, but the reconstruction of the country is already on everyone’s mind. And not just in Ukraine. Under what conditions? Who is in charge of coordinating and restoring a country transformed into a gigantic open-pit minefield? And especially how much money will it be necessary to put on the table? The costing of the destruction is chilling: nearly 138 billion dollars at the end of December 2022, according to the latest estimates by experts from the Kiyv School of Economics. But it will be necessary to inject much more to compensate for the lasting drop in production and to bring shaky infrastructures back up to European standards. At the OECD, we are talking about a total bill of 2000 billion dollars! Astronomical in view of the 200 billion dollars devoted to development aid each year.

In kyiv, we first think of making Russia pay. Especially since Vladimir Putin, he does not bother with legal conveniences to practice expeditious seizures in Ukraine. In early February, Moscow announced that it had “nationalized” nearly 500 properties in Crimea belonging to Ukrainian oligarchs, including those of Rinat Akhmetov, the country’s richest man, and those of billionaire Igor Kolomoiski. So, in the Ukrainian capital, an idea comes up in a loop in all the discussions: to get your hands on the jackpot of property – real estate, bank accounts, yachts – frozen within the framework of the sanctions against Moscow. Between the approximately 300 billion dollars of foreign currency reserves of the central bank and the real estate and financial assets belonging to the oligarchs placed on the Western blacklist, the envelope could reach 350 to 400 billion.

Except that there is a big problem: the law. “The freezing is a political decision, the seizure, a court decision. Seizing and then confiscating property previously frozen without a trial is akin to expropriation”, explains Olivier Attias, lawyer and specialist in the subject of sanctions at August Debouzy. . “Whether criminal or financial, the credibility of European sanctions is based on strict compliance with the European Convention on Human Rights”, adds lawyer François Zimmeray. It remains to be seen which court could pronounce such a decision. There is the International Criminal Court (ICC) in The Hague, but Russia has never ratified the Rome Statute, the international treaty that gave birth to this institution. The ICC can overrule it, but only if it has a mandate from the UN Security Council. Problem, Russia is a permanent member of this famous cenacle.

So, at the European Commission, we are already working on the idea of ​​creating an ad hoc international tribunal. We are also working on a regulatory framework that would make it possible to seize part of the 17 billion Russian assets frozen on the continent. A text included in a directive which will be presented this spring to the European Parliament will make it possible to qualify as “eurocrime” all attempts to circumvent sanctions. A way to pave the way for a legal complaint. Another solution is to copy the well-established procedures in France relating to ill-gotten gains. In May 2022, the NGO Transparency International filed a complaint with the National Financial Prosecutor’s Office for money laundering, tax evasion, corruption and breach of probity. According to information from L’Express, five oligarchs are in the sights and the sums at stake would reach 10 to 15 million euros per person. “The investigation is progressing and the idea is to broaden the scope of the incriminated persons”, assures Sara Brimbeuf, head of grand corruption advocacy for Transparency International. However, these procedures take years to complete.

In the meantime, Ukraine’s allies, led by the United States and Europe, will have to put their hands in their wallets. Just like the major international institutions such as the IMF, the World Bank, the European Bank for Reconstruction and Development or the Council of Europe Development Bank, which specializes in financing more social projects. Private investors are also expected with open arms. At the end of December, during an international summit on the subject organized in Paris, the idea of ​​creating a platform, on which Ukraine would indicate its needs and donors what they are ready to finance, emerged.

It remains to ensure the proper use of the funds paid. Before the war, Ukraine was one of the most corrupt countries on the planet. To give guarantees to Westerners, Volodymyr Zelensky recently launched a vast operation clean hands, dismissing a dozen senior officials implicated in embezzlement on purchases of equipment and food for the army. “A lot has been done in recent years, but there are still significant pockets of corruption. Issues of governance and transparency will be paramount in the reconstruction phase,” admits former economic development minister Tymofiy Mylovanov.

The International Monetary Fund has taken up the subject. A sort of audit, bearing on the country’s ability to properly manage the funds allocated to it, is underway. True to its method, the IMF has already set certain conditions: the presentation to Parliament of three bills intended to increase tax revenue, the reform of social security or the appointment in a transparent manner of a new board of directors. of Naftogaz, the national gas company… A form of trusteeship, annoyed a Ukrainian official. The bombs are still falling as the bickering around the reconstruction of the country is already beginning.