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William Middleton's avatar

Kevin - great post as always. I constantly go back to the $300 billion in frozen Russian assets trapped in the West. Perhaps Russia can actually use this as part of negotiations and agree that a certain portion of this can be formally transferred both to the West and what remains of Ukraine as a form of soft “reparations”. However, Russia needs assurances that at least part of what remains of Ukraine will be part of the “Russian world”. In your opinion, is there a potential for a further (3rd) partition in which Western Ukraine, centered in Lviv, permanently joins the West and perhaps NATO? I’ve always said NATO is too invested not to get something at this point. Perhaps a share of the $300 billion and Western Ukraine?

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Kevin Batcho's avatar

Thanks William!! Absolutely, Russia will want NATO to take over Galicia. Russia doesn't want to occupy this troubled land. But they don't want it independent to become a sort of Eastern European Yemen from which attacks against Russia can be launched. If NATO takes it over, they will have to ensure the Ukrainian nationalists there do not devolve into a Houthi-style insurgent force.

The rest of Ukraine will be split between eastern areas which will be annexed by Russia and a central rump state that will get the Belarus treatment. Where the eastern border is drawn between these two entities depends on how quickly Ukraine surrenders.

The frozen central bank assets will be part of a larger negotiation over property confiscations by Russia of Western assets there and of the West of Russian and oligarchic property seizures. On top of this is the question of compensation for the Nord Stream attack. It serves Western interests to blame the attack on Ukraine, who are all tapped out and will never be able to pay any sort of compensation. It's interesting that as soon as Kiev launched the Kursk debacle, the West unambiguously pointed the finger of blame at Ukraine for the pipeline destruction. These negotiations will be complex and difficult and will follow any formal peace deal between Russia and what is left of Ukraine.

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Peti Bacsi's avatar

Yeah, I’m very curious how these negotiations will go. At this time it is difficulties to picture how (and with whom) will Russians down to negotiate .

Sometimes I think that considering the valuation of natural riches of the already annexed oblasts and the ones to come, RU just considers the frozen $300 billion as the cost of doing this …

Still an illegal seizure ‘though.

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Kevin Batcho's avatar

On one hand, Russia has likely written off these assets. On the other hand, they will not want to set a legal precedent that allows the West to confiscate assets arbitrarily. From what I understand—though I am not a lawyer—the West has the right to freeze these assets during the conflict but must release them once hostilities conclude. The only exception would be if Russia were defeated and agreed to forfeit these assets as part of their surrender, which seems highly unlikely. Seizing the interest payments appears to be illegal, and this wealth will likely need to be compensated to Russia once the conflict ends. As for the seized property, it will take years to resolve, enriching many lawyers and accountants in the process.

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