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A refugee advocacy group chaired by former Liberal foreign affairs minister Lloyd Axworthy is proposing a trust fund be created to redistribute seized Russian assets to Ukrainians as allies of Kyiv make plans for rebuilding the war-damaged country.

The federal government under Deputy Prime Minister Chrystia Freeland pioneered an effort last year to seize and sell Russian assets to fund the reconstruction of Ukraine and has already announced plans to seize a massive Volga-Dnepr cargo plane parked in Toronto as well as US$26-million belonging to a company owned by Russian billionaire Roman Abramovich.

There are other assets available to liquidate as well. According to the RCMP, as of February, more than $135-million of assets in Canada have been frozen as a result of sanctions imposed on Russia.

The World Refugee & Migration Council, chaired by Mr. Axworthy, wants to encourage widespread adoption of this scheme. The proposal was outlined in a paper on the eve of a Ukraine Recovery Conference in London, where allies are mobilizing support for reconstruction in the European country. In March, the World Bank estimated the cost of reconstruction and recovery in Ukraine has grown to US$411-billion.

Mr. Axworthy said proponents of the plan hope to mobilize international support for turning over the proceeds of seized Russian assets to Ukraine in the same way that Canada garnered global backing in 1990 for its campaign to eradicate the use of landmines.

“It’s a Robin Hood proposition,” he said. “You take from the Sheriff of Nottingham who was putting people in jail, and you give it to the people who were affected by this.”

The council is proposing Canada establish a trust – it suggests naming it the Canadian Ukrainian Social Impact Reconstruction Trust Fund – to manage the money raised by the sale of Russian assets. Mr. Axworthy says he hopes other countries will adopt the idea as well.

“The Canadian model has to be replicated in a larger collaboration to make it work.”

The trust fund would make grants to organizations in Canada and Ukraine to help the most vulnerable Ukrainians in the areas of education, health care, poverty alleviation and environmental sustainability, and support economic stability and victims of Russian aggression, including wounded or disabled veterans. The goal would be “humanitarian assistance by investing directly and indirectly in medium- and long-term projects that aim to create positive social and environmental impact,” the report said.

The trust would be structured to “ensure that the funds are managed and distributed under a well-defined mandate and mission or purpose, with input from Ukrainians, but most importantly, by individuals experienced in acting in a fiduciary fund management capacity,” the report said.

Last year, Ottawa gave itself the power to sell off assets of foreigners seized under sanctions law in a budget implementation bill.

Lawyer John Boscariol, head of McCarthy Tétrault’s trade and investment group, said other countries are preparing legislation similar to Canada’s.

“My sense is, although the other allies don’t have these mechanisms in place, or aren’t as advanced getting these into place, I think they are watching very carefully to see how it unfolds. And one of the things I’m sure everyone is watching is Russia’s reaction.”

The Russian government last week warned its relations with Canada were “on the verge of being severed” after Ottawa announced its plans to seize the Russian-registered Antonov AN-124 plane in Toronto. Russia’s Foreign Ministry warned of reciprocal measures.

Republican and Democratic members of the U.S. Congress introduced legislation on June 15 that would give the U.S. President the authority to confiscate Russian assets frozen in the United States and transfer them to help Ukraine. The Rebuilding Economic Prosperity and Opportunity for Ukrainians Act would also bar the release of funds to Russian entities under sanction until Moscow withdraws from Ukraine and agrees to provide compensation for harm caused by the war.

Mr. Boscariol said Russia may want to make an example of Canada as Ottawa uses this new seizure and forfeiture mechanism in order to deter other countries from following suit. This could mean retaliatory seizures of assets. “I think Russia would be doing everything it can to nip this in the bud, and to be very aggressive in its response,” he said.

Ms. Freeland’s office said it’s carefully considering what the World Refugee & Migration Council and others have proposed.

“Sanctions are a key part of Canada’s response to Russia’s illegal and barbaric full-scale invasion of Ukraine, as they are for our partners and allies,” press secretary Katherine Cuplinskas said.

With a report from Reuters

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