Frozen Russian Assets: Ukraine

Chris Coghlan Excerpts

Monday 6th January 2025 Commons Chamber

[Chris Coghlan (Dorking and Horley) (LD)]

I commend my hon. Friend the Member for Tunbridge Wells (Mike Martin) for securing this vital debate. There are many veterans in this Chamber; one in nine Liberal Democrat MPs has served in the armed forces. We know the price of freedom—many of us have seen it written on the grave of a friend. There are tens of thousands of Ukrainians paying that bitter price right now, which will all be in vain if we falter in our support. With the looming Trump Administration, that risk is real. As the hon. Member for Loughborough (Dr Sandher) has said, if Ukraine fails, the consequences for our security would be catastrophic. In the same way that our failure to show resolve on Syria perhaps encouraged Putin to attack Crimea, our failure to show resolve on Ukraine might encourage him to attack the Baltic states, test NATO’s article 5, and shatter the peace in Europe.

That does not need to be our future. If the G7 seizes the $300 billion in Russian assets, we have the opportunity not only to keep Ukraine in the fight, but to win. Many are worried that seizing that $300 billion could undermine the global financial system; I am here to argue that that is not the case. As Lawrence Summers—the former US Treasury Secretary—and many others have pointed out, those fears are overblown, because when those assets were frozen in the first place, there were no observed consequences in financial markets. It has been made clear to financial markets that the assets of a sovereign aggressor are at risk when they are on deposit in a G7 country, as they should be. The risk that those assets will be seized should already have been substantially priced in, reducing the possibility of capital flight from a negative surprise.

In any case, where would that capital fly to if the G7 countries act together? The pound, dollar, euro and yen amount to almost 90% of the world’s reserve currencies. China is not an option because of capital controls, so there are no other viable reserve currencies for countries to deposit their reserves in. As a former hedge fund manager, I spent years investing professionally in financial markets, and I can assure the House that investors will not be discouraged from investing in safe and attractive G7 currencies for two simple reasons: fear and greed.

Today, the west spends $105 billion annually on Ukraine’s defence, including $45 billion from the US. The $300 billion in Russian assets could fund the lot for three years, or the US portion for six years if Trump withdraws his support. Many think that Russia’s resources are inexhaustible, yet according to the Royal United Services Institute, Russia is going to run out of artillery ammunition and armoured vehicles next year. It has already suffered 700,000 casualties, so Russia’s capacity to wage war will fall dramatically in one year’s time, but only if we can keep Ukraine in the fight.

If Ukraine can end this war on terms that demonstrate that it is victorious, the consequences for our security will be profound. The threat from Russia will be greatly diminished, China will think twice about challenging a liberal world order, and the narrative of the decline of the free world and the rise of dictatorships will be decisively set back. Imagine what the free world could then achieve in the 21st century. As such, I urge the Government to seize that $300 billion in frozen Russian assets to keep Ukraine in the fight, and I salute the Ukrainian soldiers who are laying down their lives, not only for their country’s freedom but for our freedom too.