The answer to the UK & Ukraine’s defence financing challenge

It is encouraging that the Starmer government in the U.K. has led from the front in committing UK forces to help police any future peace agreement in Ukraine. It is also encouraging that opinion polls in the U.K. still show strong backing (60%) for Ukraine and also for the UK’s commitment to police any peace.

One particular difficulty for the U.K. though is budget finances to fund any such endeavour. Indeed, the Starmer government has been struggling to commit to increase defence spending even from the 2.3% planned at present to 2.5% of GDP and beyond. A large military deployment to Ukraine would further strain UK defence financing.

There is though an obvious solution to the above challenge in the ready availability of $330 billion of immobilised Central Bank of Russia assets in Western juridications. Herein I do not think Ukraine would have any issues with these funds being committed to its security and defence, rather than recovery and reconstruction. Indeed, Ukraine has to be secure before there can be any serious focus on recovery and reconstruction.

Now much has been made of the fact that a large weight of the $330 billion is in EU jurisdictions, and I think something close to $170 billion in Belgium. However, of the total around $25 billion is thought to be in the U.K. Given this fact, it would seem to be an obvious solution now that the U.K. moves quickly to confiscate these assets, allocating them to Ukraine’s defence and a portion of this could be used to fund the deployment of UK forces in a peacekeeping capacity to Ukraine. Indeed, $25 billion amounts to around 40% of annual UK defence spending, so this sum is more than enough to cover the extra financial burden of a UK military deployment to Ukraine.

Fortunately there are easy solutions, like using immobilised Russian assets, to cover the increased costs of securing Ukraine and Europe against Russian aggression. The key bottleneck is though now not finance but military equipment and supplies and unfortunately, despite three years of war, Europe has failed to put its military industrial complete into gear. Europe still remains heavily dependent on the U.S. for military supplies, a situation which will be slow to improve. But financing can perhaps help therein and again freeing immobilised Russian assets - the full $330 billion - could be used to fund the biggest ever European arms procurement deal from the USA. Europe should announce a huge $500 billion to $1 trillion arms procurement programme, significantly funded from immobilised Russian assets, and commit to buy much of the weaponary from the U.S. Therein if Europe came to Trump with the largest arms procurement deal in history, say $50-100 billion a year for the next decade, securing in the process hundreds of thousands of US jobs, I doubt that even Trump could say no to that. Call it the Trump Defence of Democracy Programme, or whatever to glitter in his eye enough to get his agreement. The defence of Europe is now a needs must, we must do whatever we need to do.