The Guardian

Truss wants UK to follow Canada and seize Russian assets for Ukraine recovery

Patrick Wintour Diplomatic editor

The UK wants to follow the example of Canada and seize the assets of Russians in the UK in order to give them to Ukraine, Liz Truss, the foreign secretary, has said.

Truss is due to give a speech today to a Ukraine reconstruction conference in Lugano, Switzerland, that will be attended either in person or virtually by most of the senior Ukrainian political leadership.

It is estimated that more than 120,000 homes in Ukraine have been destroyed, creating the need for billions to restore the country and make it a Europe-facing economy.

Truss told MPs last week that she was supportive of the idea that the government could seize frozen Russian assets in the UK and redeploy them to the victims of Russia’s attacks in Ukraine.

She said: “I am supportive of the concept. We are looking at it very closely. The Canadians have in fact just passed legislation. This is an issue that we are working on jointly with the Home Office and the Treasury, but I certainly agree with the concept. We just need to get the specifics of it right.”

She said the initiative would “most probably” need legislation but not necessarily.

The seized funds could be supplied either to individuals in a form of reparations or to the Ukrainian state.

At the moment, the UK can only suspend Russian assets under the Economic Crime Act for 56 days and roll over the suspension for a further 56 days.

In her speech to the conference, Truss will say that the UK will position itself as Ukraine’s key partner in the recovery process and that it has already offered $1.5bn (£1.2bn) through multilateral loan guarantees and more than £100m in bilateral support.

She will say: “Ukraine’s recovery from Russia’s war of aggression will be a symbol of the power of democracy over autocracy. It will show Putin that his attempts to destroy Ukraine have only produced a stronger, more prosperous and more united nation.

“The UK is resolute in its support of Ukraine’s territorial integrity and will remain at Ukraine’s side as it emerges as a strong, thriving and cutting-edge democracy. We have led on support for Ukraine during the war and will continue to lead in supporting the Ukrainian government’s reconstruction and development plan.”

The Foreign Office said: “Humanitarian assistance and de-mining programmes will help rebuild villages, towns and cities, and in the longer term the UK will share economic and financial expertise to transform Ukraine into a global hub for investment, enterprise and cutting-edge technology.

“The UK will champion the recovery of the city of Kyiv and the Kyiv region, on the request of President Volodymyr Zelenskiy.”

In practice, the scale of the reconstruction depends on the outcome and length of the war, and whether eastern Ukraine – suffering the worst devastation – is returned to Kyiv or remains in Russian hands.

About 6.4 million Ukrainians are estimated to have left the country, while another 6 to 7 million citizens have left their homes and relocated to western parts of Ukraine.

The cost of the war is estimated at $1tn if it lasts until the end of the year. The International Monetary Fund has estimated Ukraine’s balance of payments gap until June at €14.3bn.

One of the goals of the conference is to sketch out a vision of a Ukrainian economy that dovetails with Europe, providing specialisms in agriculture, renewable energy and technology.

One of the most sensitive issues will be a programme of de-oligarchisation and how to entrench powerful anti-corruption institutions at a time when large flows of money from the US and Europe are likely.

Russia has said it is in control of Ukraine’s eastern Luhansk region after taking over Lysychansk, its last Ukrainian-controlled city.

The Russian defence minister, Sergei Shoigu, told President Vladimir Putin yesterday that their forces had established “full control” over Lysychansk and several nearby settlements, the Russian state news agency RIA Novosti reported.

Ukraine’s military command later confirmed that its troops had been forced to pull back from the city, saying it would otherwise have led to “fatal consequences”.

“In order to preserve the lives of Ukrainian defenders, a decision was made to withdraw,” it said in a statement on social media.

Earlier in the day, Ukraine had disputed the claim. Its president, Volodymyr Zelenskiy, said Russia was not in full control and the battle was continuing on the outskirts of the city. He admitted, however, that Ukraine was in a tough spot.

But by last night, he acknowledged the loss of the city, vowing that Ukraine would retake the area with the army’s tactics and the prospect of new, improved weaponry.

“If the commanders of our army withdraw people from certain points at the front, where the enemy has the greatest advantage in firepower, and this also applies to Lysychansk, it means only one thing,” Zelenskiy said in his evening video address. “That we will return thanks to our tactics, thanks to the increase in the supply of modern weapons.”

Fighthing in Ukraine's east has remained intense since Moscow refocused its efforts there. Violence has even spread out of Ukraine, with officials in the Russian city of Belgorod accusing Ukrainian forces yesterday of bombing a neighbourhood, killing three people.

"The Russian takeover of Lysychansk means Moscow has in effect won control of Luhansk as well as more than half of Donetsk, amounting to about 75% of the two eastern regions, collectively known as Donbas.

Occupying the whole of the Donbas region has been a key goal of the invasion, with Russia concentrating a large chunk of its forces there after failing to occupy northern Ukraine.

The advance will bring Russian forces closer to cities and towns in Ukrainian-controlled Donetsk, including the frontline town of Sloviansk, where authorities said six people were killed and 15 injured in shelling yesterday, and the post-2014 regional Donetsk capital of Kramatorsk, where a missile destroyed a hotel, according to its mayor, Oleksandr Goncharenko.

Russian forces published a video online allegedly shot in Lysychansk of soldiers jubilantly holding up the Russian and Chechen flags in front of war-damaged buildings.

Last month, Ukraine’s army withdrew from the city of Sievierodonetsk, just north of Lysychansk, citing the scale of their losses.

Though Ukraine does not publicise figures on the number of its soldiers killed and in what locations, the Ukrainian president’s adviser, Mykhailo Podolyak, said at the time that between 100 and 200 were dying each day.

The London-Based Institute for the Study of War said Ukrainian forces had probably withdrawn from Lysychansk to avoid encirclement.

The highway and main supply route between the Ukrainian-controlled Donetsk region and Lysychansk has been heavily shelled. Several civilians, including a French journalist, have died driving along the route over the past month.

Inside Lysychansk, according to one aid worker interviewed by France24, Russia was using its superior artillery capabilities to flatten buildings one by one.

"Russia forces are entrenched in the area of Lysychansk and the city is on fire,” said Serhiy Haidai, the head of the Luhansk regional military administration.

Ukraine’s military intelligence told the Guardian last month that Ukraine had one artillery piece to 10-15 Russian artillery pieces.

Since then, several western countries have promised more military aid, including artillery.

Separately, Russia blamed Ukraine for a missile attack on the Russian city of Belgorod, near the border with Ukraine, in which they said three people died and four were injured, including a 10-year-old child. Belgorod’s regional governor, Vyacheslav Gladkov, said that 11 apartment buildings and 39 houses were damaged or destroyed in the overnight incident.

Russian defence ministry spokesperson, Igor Konashenkov, said it “was intentionally planned and launched at the civilian population”. Russia said it intercepted three Ukrainian missiles, but one fell on to an apartment building.

There have been several instances of explosions in Belgorod since the invasion began.

Ukraine has not directly accepted responsibility but has previously described the incidents as “karma” for Russia.

Russia’s primary ally, the Belarusian president, Alexander Lukashenko, has said the two states have created “a single army” in the war against Ukraine.

“We were and will act together with our brothers in Russia. Our participation in the ‘special operation’ was determined by me a long time ago,” the Belarusian state news agency Belta reported Lukashenko saying as he marked Belarusian independence day yesterday.

On Saturday, Lukashenko claimed that Belarus would fight only in response to a provocation. He then claimed, without providing evidence, that last week the country’s anti-aircraft systems had shot down several missiles that were fired by Ukraine at Belarusian military installations.

‘Russian forces are entrenched in Lysychansk and the city is on fire’

Serhiy Haidai Regional governor

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