Russians queue up to withdraw funds from ATMs soon after Russia's invasion of Ukraine. Image: CTV Screengrab

There seem to be two obvious outcomes of the ongoing conflict between Ukraine and Russia.

First, Ukraine will lose the Crimean Peninsula and the Donbas region and turn into a buffer between the West and Russia if Kiev agrees to Moscow’s demands. If Kiev disagrees with Moscow and the latter wins the battle, the existence of modern-day Ukraine is under question.

Second, if Ukraine wins the war, Russia will lose arms, troops and assets. More important, it will lose its reputation as a superpower with strategic and tactical nuclear weapons with the diminished sphere of influence in the Eurasian landmass.

A third and unintended consequence of the war will be on the reputation of the West, and the collective West could be a net loser in the long run. Yes, you read correctly: The US, its allies, and partners will be the biggest losers of the Ukraine war.

Whither the institution of private property?

Property rights have been a core value upon which the prosperity and soft power of the Western world have been built. Global opinion favored the Western powers because of their firm commitment to the institution, rules, and the global public goods they provided.

As a retaliation to Russia’s action against Ukraine, the US, its NATO allies, and other partners announced that they would seize the foreign assets owned by the Russian Central Bank and assets owned by Russian oligarchs.

US President Joe Biden, in his first State of Union address, said, “We are joining with our European allies to find and seize your yachts, your luxury apartments, your private jets.” The US allies and partners immediately joined hands with Biden to seize Russian foreign assets.

The concept of private property is among the oldest institutions that Western societies have cherished. The protection of private property was not only a means of economic prosperity but also a fundamental precondition for preserving individual freedom and the bedrock of Western civilization.

The history of political and economic thought of the West clearly illustrates how important is the institution of private property for their advancement. The principal treaties of the Western thinkers centered on the idea and institution of private property, liberty, and freedom. Thus the concept of private property has been an indispensable factor in the evolution of Western civilization.

The philosophy of property rights

Italian philosopher and diplomat Niccolò Machiavelli, in his book The Prince, wrote, “And when he is obliged to take the life of anyone, to do so when there is a proper justification and manifest reason for it; but above all, he must abstain from taking the property of others, for men forget more easily the death of their father than the loss of their patrimony.”

The states were created to protect the property of the citizens. Thus the evolution of property rights caused the development of Western civilization. Philosopher Jean Bodin said the right to property is a “natural right.”

The US Declaration of Independence states, “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.” The idea of “life, liberty and the pursuit of happiness” is often called the “American Dream” every American wants to chase by earning a handsome purse of private property.

British liberal political thinker John Locke said the “natural rights” included the rights to life, liberty and property, and the most important of these was the third. He viewed property rights as natural rights and the legal rights of the citizens, and their preservation the moral obligation of the state.

Classical liberalists such as Adam Smith and utilitarian Jeremy Bentham viewed the institution of private property as the essential instrument for the economic progress of Europe. Bentham’s idea of economic welfare revolves around the notion of private property.

He viewed private property as the primary source of “the greatest happiness of the greatest number.” The welfare economics of free-market capitalism is based on the idea of free enterprises. The institution of private property is the fundamental prerequisite for free enterprises. 

Another core value of Western civilization is the idea of freedom. British philosopher Thomas Hill Green viewed “the right to property as an instrument for exercising moral freedom.” Without private property, we cannot imagine individual freedom.

The core idea of the Second Amendment of the US constitution is also based on the concept of private property. It says, “A well-regulated Militia, being necessary to the security of a Free State, the right of the people to keep and bear Arms, shall not be infringed.” Here, a free state is a means of protecting US citizens’ life, liberty, and property. 

The economic prosperity of Europe was achieved with the help of the norm of private property and what writer Eric Jones termed the “The European Miracle” in the last quarter of the 20th century. Thus the heart of free-market capitalism is the notion of private property. “The West” views free-market capitalism as a superior economic system, and most countries follow a free-market economy as an instrument for economic development.

A question of trust

The Ukraine war will end eventually, whatever be the results. However, as unintended consequences, the thorny question of breach of trust and trustworthiness will haunt the US, its NATO allies, and other partners. As a result, the West’s global governance institutions, rules, and global public goods are also subject to skepticism. 

The most important unintended consequence of assets seizure is the atmosphere of mistrust between the West and its non-NATO allies, partners, and friends. They will conclude that the relationship between the West and them is expected to go well if and only if they obey what the West asks them to do.

If they refuse to obey, the West will start economic sanctions and assets seizures. As a result, international trade, investment, and technology transfers will be badly affected, which are the critical source of prosperity for the West.

The emirs and sheikhs of the Arab Gulf countries have already started to reconsider the trustworthiness of the US and its allies. Major emerging-market economies such as Brazil, China, India, and South Africa maintained neutrality on the political fronts of the Russia-Ukraine war. In contrast, they took the side of Russia on the economic front.

China and India intend to buy Russian oil and gas in local currency. This further intensifies de-dollarization and boosts the erosion of the supremacy of the US dollar as a foreign reserve currency. As well, the British pound and Japanese yen will further decline as foreign reserve currencies.

Proclaiming the seizure of property owned by the Russian Central Bank and oligarchs, Biden said, “The United States is targeting the main artery of Russia’s economy.” However, the Western seizure of Russian assets and economic sanctions are not likely to work. Instead, the Western countries made a hole in the heart of Western civilization.

It seems many countries obey the US because of its coercion power, not because of trust and dependability. Western countries imperiled their reliability and trustworthiness by infringing on the Russians’ foreign assests, and it appears they have shot themselves in their own feet.

The author tweets @BhimBhurtel.

Bhim Bhurtel

Bhim Bhurtel teaches Development Economics and Global Political Economy in the Master's program at Nepal Open University. He was the executive director of the Nepal South Asia Center (2009-14), a Kathmandu-based South Asian development think-tank. Bhurtel can be reached at