The Economist - USA (2022-06-11)

The Economist June 11th 2022 Leaders 13

The bill for rebuilding Ukraine’s smashed citiesandrepairing

its ruined industrial base will be huge: upwardsof$600bn,ac­

cording  to  some  estimates  (see  Finance  &  economicssection).

That  has  got  many  people  wondering  if  the  Westshouldshift

from merely freezing Russian assets temporarilytoconfiscating

them permanently. They could then be used to payfortherecon­

struction that lies ahead.

Russia has about $300bn of reserves held in theWestandup

to another $1trn of mainly private­sector assets heldabroad.On

May  19th  Ursula  von  der  Leyen,  the  president  oftheEuropean

Commission,  said  that  the  eu was  looking  intoassetseizures.

The g7 has discussed using them, too.

The  idea  that  the  aggressor  should  pay  for

the damage it has caused is appealing and pop­

ular.  But  the  legal  justification,  and  strategic

logic, of sanctions are that they impair a coun­

try’s capability to pursue a course of action and

may change its behaviour, because if that coun­

try alters its path the assets will be released. A

shift  from  this  approach  to  a  policy  of  perma­

nent seizure would be a big step that would be justifiable only if

two tests are passed. The first is that any new policy is compati­

ble with the rule of law. And the second is that it has a clear stra­

tegic pay­off.

Start with the rule of law. In America the president has the au­

thority to freeze a foreign government’s assets but not typically

to  seize  them  unless  America  is  at  war  with  that  country.  Ever

since  Russia  invaded  Ukraine,  President  Joe  Biden  has  been  at

pains to say America is not in open conflict with it. The execu­

tive branch can transfer control over certain foreign assets when

it stops recognising a country’s government, as with some funds

thatbelongtoVenezuelaandAfghanistan(seeAsiasection).

However,Americasaysit doesnotseekregimechangeinRussia.

Underinternationallaw,reparationsusuallyinvolvethecon­

sentofthepayingcountry,typicallyaspartofa peacetreaty.

Suchnegotiationsarea longwayoff,andUkrainemustnotbe

forcedintothem.Seizingassetsownedbyindividuals,however

odioustheyare,beforetheyhavebeenconvictedbya courtisal­

sodubious.Insomecountries,suchasGermany,doingsomay

violatetheconstitution.

WhatabouttheWest’sstrategicinterests?Intheshortrun,

permanentseizurewouldmakenodifferencetotheKremlin’s

abilitytofunditsdeadlywarmachine,sinceMr

Putin’sregime cannotuse theforeignassets

thathavealreadybeensanctionedandfrozen.

Inthelongrun,theprecedentsetbyconfisca­

tionswithouta clearlegalfootingwouldexpose

all cross­border assets, including Western

ones, to tit­for­tat appropriation by govern­

ments.Itwouldalsogivea furtherincentivefor

countriesthatarenotalliedwithAmerica,or

which have unstable relations with it, to bypass the American­

led financial system, which is a bedrock of Western power. 

Rather  than  resorting  to  asset  confiscations,  the  West  must

strengthen  Ukraine’s  war  effort.  That  means  supplying  more

heavy weapons and speeding up their deployment and the train­

ing  of  Ukrainian  forces  to  use  them  (see  Europe  section).  It

means maintaining sanctions for as long as Russia wages its war

and occupies Ukraine. And it means making clear that even if no

peace deal is signed, and no Russian reparations are ever paid,

Europe and America will still have to foota largepart of the bill

for rebuilding Ukraine’s shattered economy.n

Russia, central-bank reserves

Foreign currency and gold, by location

January 1st 222, % of total

France

Germany

China

GoldinRussia

50 201510

Not under sanctions

Under sanctions

I

n 1995, ayear  after  becoming  South  Africa’s  first  black  pres­

ident, Nelson Mandela gave a speech in Alexandra, a township

in Johannesburg. “It saddens and angers me to see the rising hat­

red  of  foreigners,”  he  said,  chastising  residents  for  destroying

migrants’ homes. “We cannot blame other people for our troub­

les.” Under Mandela, the African National Congress (anc), many

of  whose  fugitive  leaders  had  been  sheltered  by  other  African

countries  during  apartheid,  took  in  Africans  fleeing  wars  in

Congo, Somalia and elsewhere. The new government also made

it easier for Africans to work and settle in South Africa. 

They have not always felt welcome. Xenophobic locals occa­

sionally  attacked  immigrants  in  the  1990s  in  poor  urban  areas

like Alexandra, and there was more widespread violence against

foreigners  in  2008.  In  general,  however,  South  African  politi­

cians have refrained from inciting such horrors. Unfortunately,

that is changing. Today politicians from several parties are vying

to see who can blame immigrants most loudly for the country’s

self­inflicted  problems  (see  Middle  East  &  Africa  section).  The

virulence  of  their  rhetoric  varies,  but  the  consequence  is  the

same: life for immigrants has grown nastier and more perilous. 

Vigilante  groups  are  growing  in  strength.  They  spread  wild

rumours  on  social  media.  They  stomp  around  townships,  de­

manding  (illegally)  to  check  foreigners’  identity  documents.

Sometimes, they inflict mob justice. Astonishingly, one in eight

South  Africans  say  they  have  taken  part  in  “violent  action”

against immigrants; almost as many say they would be prepared

to  do  so.  Most  South  Africans  think  migrants  commit  more

crimes  (they  don’t)  and  “steal”  local  jobs  (studies  suggest  that

they tend to boost both gdpand employment).

Instead of rebutting these baseless beliefs, political entrepre­

neurs seek to exploit them. Actionsa, a new right­wing populist

party;  the  Economic  Freedom  Fighters,  a  hard­left  outfit;  and

ethnicity­based parties such as the Inkatha Freedom Party and

the Patriotic Alliance, all fan fear of foreigners to woo votes away

from the anc, which is expected to lose its majority in the next

election in 2024. 

Anxious to cling to power, the ruling party has responded by

treating foreigners more harshly. The processing of asylum ap­

plications has ground to a halt. Some provinces want to restrict

foreign ownership of township shops. A new immigration sys­

tem  promises  to  make  it  harder  for  firms  to  hire  non­citizens.

And the government says it will no longer renew residence per­

mits used by many Zimbabweans since the ruin of their country

in the late 2000s. Before long, they will face a grim choice: live in

South Africans should not blame immigrants for their country’s failings

Scapegoating Africans

Xenophobia in South Africa