The Canadian behind the West's massive sanctions on Russia says it's time for Round 2

OTTAWA — Chrystia Freeland is in her element in Davos. That was obvious when Canada’s deputy prime minister and finance minister — one woman, two jobs — jetted to the Alpine village in January to rally support for Ukraine from global influencers she’s known for 30 years.

On a panel meant to bolster Western solidarity with Ukraine, Freeland traded remarks with the Polish foreign minister, Radek Sikorski, whom she first met in her Kyiv apartment in 1991, and CNN's Fareed Zakaria, whom she met in London decades ago (she thinks they were introduced by Pulitzer-winning journalist Anne Applebaum).

That week, at cocktails and on stage and in private conversations, she caught up with old friends and pushed an ambitious goal: To persuade war-weary allies to seize Russian central bank assets and then redirect those riches to rebuilding Ukraine, never mind the legal and diplomatic risks.

But as she fought to keep Ukraine’s bid for independence alive, her government was listing towards defeat, raising questions about her own political future.

She was wheels up for Switzerland when the latest bad-news poll dropped: Freeland's Liberal Party, led by Prime Minister Justin Trudeau, trailed the Conservative Party by 11 points, a gap that has only worsened since. Freeland’s role in that slide is impossible to ignore. Her economic policy in the aftermath of the pandemic has failed to mollify anxious and cash-strapped Canadians.

The Conservative leader, fiery populist Pierre Poilievre, has also attacked Freeland’s globalist credentials — the same ones she used to convince allies to adopt harsh banking sanctions against Russia at the dawn of its war in Ukraine — and accused her of economic policy that “would win her applause in Davos or Brussels” rather than help people back home get by. (He has pledged to boycott Davos if he wins the next election.)

For years, Freeland has been known as Trudeau’s “fixer,” the one who saved free trade with the U.S. and patched frayed relationships with provinces. But now, she’s facing her biggest domestic test yet — a federal budget on April 16. It could be her last shot to win over millions of skeptical Canadians before the next election.

Freeland says she is committed to doing that while keeping Ukraine high on her agenda. The two battles are related, she believes.

“My 100 percent job is to act in the Canadian national interest,” Freeland told POLITICO. As she sees it, everything is connected. A Ukrainian victory “would make Canada safer, and it would make Canada more prosperous by reinforcing the rules-based international order,” she says.

Freeland ponders the alternative: "The flip side is a defeat for Ukraine, with all that means for the revisionist powers in the world."

Making Putin Pay

Back in the early days of the war, Freeland convinced the West to freeze more than $300 billion in Russian assets.

Now she’s pushing for more: She wants those governments to confiscate those assets and funnel them to Ukrainians who are desperate for cash that could turn the tide in the war and rebuild the country.

“Pussyfooting around Putin doesn’t really work,” Freeland says.

The pursuit is personal for the granddaughter of Ukrainian immigrants. A native of rural Alberta, where ties to Ukraine run deep, Freeland has been a major booster of Ukraine’s war effort. She regularly speaks and texts in Ukrainian with top officials in Kyiv. She also snaps at Russians in their mother tongue.

In the war’s early days, she spoke many times daily with Ukrainian Prime Minister Denys Shmyhal. “What can I do?” she asked on day one. “I told her about operational needs,” Shmyhal told POLITICO in a written statement. “Our needs of weapons, and what kind, [our] need of funding."

Freeland's typical response: “I am working on it.”

“Canada has become an icebreaker and an example for others,” says Shmyhal, who pointed to a C$500 million ‘Ukraine Sovereignty Bond’ powered primarily by Canadian investors, transferred to Kyiv through an International Monetary Fund account, which helped the Ukrainian government make pension payments and fuel purchases as war raged.

“When you've been doing this for a while, you learn who are the doers, who is pragmatic,” says Bob Zoellick, the former U.S. Trade Representative and World Bank president. “Chrystia Freeland has the ability to leverage influence much more than others.”

But she’s running into obstacles in her latest push: Not one of the Western allies has confiscated a cent, even as the proposal gains prominent advocates in the G7 and EU — including British Foreign Secretary David Cameron, European Commission President Ursula von der Leyen and Swedish finance minister Elisabeth Svantesson.

Skeptics warn that the risky plan could set off unprecedented geopolitical instability. Beijing, for instance, might fear Chinese assets could be seized at the whim of Western allies who act in their own self-interest. Bloomberg's Andreas Kluth described the gambit as "illegal and unwise." Foreign Policy's Agathe Demarais warned of "unintended consequences." Russia has claimed to have a list of western assets ready to confiscate in retaliation.

Instead of seizing the principal assets, the EU recently hatched a plan to take control of windfall profits earned from the Russian investments. Mike McFaul, the former U.S. ambassador in Moscow who recently attended the Munich Security Conference, said that’s as far as many Europeans are willing to go.

"My impression talking to European officials is that's not the first step to this greater thing," McFaul tells POLITICO. "There's a real debate in capitals, not just [Brussels], because these assets are deposited in individual banks in individual countries."

Freeland’s point of view is bolstered by a group of activists, academics and former diplomats who wield soft power, including former U.S. Treasury Secretary Larry Summers, former U.S. diplomat Philip Zelikow, anti-Putin crusader Bill Browder and Zoellick. Laurence Tribe, the Harvard legal scholar, has penned an extensive rationale for confiscation. A pair of Canadian academics, Robert Currie and Fen Hampson, joined former Cabinet minister Allan Rock in writing a June 2023 working paper for the World Refugee & Migration Council that concluded allies would be justified under international law.

Summers, a longtime mentor of Freeland, says Canada’s finance minister was the “first vigorous public advocate among sitting officials” for the confiscation plan. He says they initially discussed the idea in 2022 — a conversation that intensified in April of 2023 over a meal she cooked and hosted in her Toronto home. The guest of honor at that dinner party was Shmyhal.

The finance minister, who traveled to Kyiv with Trudeau on the two-year anniversary of Russia’s full-scale invasion, recently had a “very long” conversation about the assets with U.S. Treasury Secretary Janet Yellen. The Biden administration is backing the measure, but Europe's most powerful governments aren't yet onside.

The lack of transatlantic consensus has caused friction between Americans and Europeans, as POLITICO recently reported.

“If you want to do big things, it can take a little bit of time,” Freeland says. “I see that less as a frustration, and more as the reality of getting things done.”

She also acknowledges that Europe needs to take the lead on this, since “Europe is on the front lines," she tells POLITICO.

Freeland soon checked herself, acknowledging the urgency of war. “A part of me sort of thinks, wow, if the Ukrainian finance minister or the prime minister were listening to me, would they be saying, ‘Chrystia! Come on! Don’t be so nice and Canadian. We have to get this done. Our people are dying.'"

The pressure is constant, she says: “Every single thing I do, I kind of feel like, wow, you should have done it yesterday."

In the meantime, Canada is proceeding alone where it can. Back in 2022, Freeland introduced legislation that allowed her government to not just freeze, but seize frozen assets. Since it passed, Ottawa has gone after $26 million in assets belonging to Russian oligarch Roman Abramovich, as well as an Antonov-124 cargo plane now stranded on the tarmac at Toronto’s international airport.

Both attempted seizures are works in progress. And Russia’s central bank reserves barely touch Canada, which exposes the country’s limited influence in the region, where it’s easy for the smallest G7 economy to be relegated to a supporting role.

For all of Freeland's advocacy on Kyiv’s behalf, allies sometimes look at Ottawa’s commitments with furrowed brows.

Canada’s ability to actually deliver military aid has come under fire. Le Devoir, a Quebec newspaper, reported in February that 58 percent of the country's C$2.4 billion in promised help has not actually found its way to Ukraine.

Not to mention persistent doubts Canada is ponying up enough defense spending. NATO allies are still waiting for the laggardly Canadians to meet a spending target of 2 percent of GDP — or even to offer a timeline on getting there.

Battle On The Homefront

Meanwhile, at home in Canada, Freeland’s reputation as a fixer is facing its biggest test yet.

She is the driving force behind Canada’s federal finances, which are bleak coming out of the pandemic. Debt-servicing payments alone are expected to balloon to C$60 billion in 2028-29 — more than double the current allocation for national defense — and sluggish economic growth is dragging down Liberal fortunes.

Canadians are anxious about grocery bills, soaring interest rates and eye-popping mortgage payments. The Liberals have responded with “grocery rebates” to bolster household bank accounts, first-time homebuyer savings accounts and billions in bespoke deals with cities meant to accelerate home building. The goal is to increase the supply of homes and help more young people save for a down payment.

Even though year-over-year inflation is falling, Canadians are tuning out Freeland’s assurances that better times lie ahead — a trend reinforced each time a pollster chimes in with Poilievre's latest lead in every region and many demographics.

Freeland’s April budget could be her final chance to sell a Liberal vision to wary voters. An election might be more than a year away, but Trudeau's government is running out of runway.

The business community is about as skeptical as the average citizen.

Perrin Beatty, the longtime head of the Canadian Chamber of Commerce, wants Freeland to deliver a game plan that can jumpstart the country’s standard of living following Covid. He’s been waiting a few years.

“You can’t cut your way back to a balanced budget. It’s irresponsible to continue to spend and simply send the bill to our kids. And you can’t borrow your way out of the problems that we have,” Beatty tells POLITICO. “What we have to do is to grow our way out.”

“There are ministers who believe in business, who have had experience in business, and who understand that business needs to be seen as a partner — and not as a problem,” he says, naming Anita Anand, François-Philippe Champagne and Mary Ng. "I'm not sure that they've represented the majority view within the government, unfortunately."

Robert Asselin, the senior vice president of policy at the Business Council of Canada, gives the finance minister a failing grade.

“She has not been able to restrain any of these spending impulses that the government has,” says Asselin. “She’s been saying ‘fiscal restraint’ now for three budgets.”

Asselin says Freeland's first budget in 2021, which pledged billions in stimulus meant to supercharge the economy, was a “fundamental misread.” In sum: Too much spending and debt, not enough strategic and long-term planning.

“It has big consequences on where we are now,” Asselin says.

A governing deal with the left-wing New Democratic Party has put pressure on Liberal restraint. A new publicly funded dental care program negotiated with the NDP has added billions in spending, and critics worry about a nascent pharmaceutical drug plan that could worsen persistent federal deficits.

Poilievre’s ascendant Conservatives have been complaining for years that a big-spending government has exacerbated the cost of living. He kept saying so as many mainstream economists predicted pandemic inflation would be temporary.

The Trudeau government is closing in on a decade in power, when restless Canadians typically give the opposition a closer look. Poilievre has taken full advantage of the desire for change, filling a campaign warchest by amplifying misery and focusing relentlessly on the economy.

He’s promising tax cuts and cheaper housing. And his lead in the polls inches up every month.

At Least One Win

With a consequential budget edging closer, Freeland insists her domestic responsibilities are “100 percent” of her focus.

But there’s always a Ukraine angle. “Helping Ukraine to succeed helps Canada, and helping Canada to succeed actually helps Ukraine because the stronger Canada is, the more of a voice and a role we can have in that fight.”

In Davos, she worked to sway the doubters.

“Western democracies are all financially constrained,” she said from the stage. "We are dealing with the debt we accumulated during Covid. All of us are investing heavily in the green transition.”

Winning the war will take a lot more money, she added, insisting that forcing Putin to foot the bill is a winning argument in democracies. “It makes a lot of sense, including political sense, for us to be able to say to our own people, ‘The aggressor will pay for the damage being done to Ukraine,’” she told the room.

Ironically, that pitch may be more effective in Davos than on the doorsteps at home.

Globetrotting friends like Zakaria and Applebaum will be zero help selling a Liberal economic plan to middle-class voters in the suburbs, as stressed-out Canadians pass judgment on Trudeau's record.

Whatever her own political fate, Freeland is convinced about victory overseas.

“I don't know when this war will end. I don't know what that ending will look like,” she tells POLITICO. “But I have a very high degree of confidence that 10 years from now, Ukraine will be democratic and prosperous and free.”