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Esince then the invasion of Ukraine in February 2022 Western governments have demonstrated against private Russian assets held abroad, from seizing oligarchs’ yachts to forcing the sale of Russian-owned football clubs . But there is still a big question mark about the huge money. About $300bn of Russian central bank funds are frozen in Western accounts due to sanctions. Given the horrors that Russia has inflicted on its neighbor, the idea of tapping this pot to help compensate and rebuild Ukraine has arisen naturally.
The moral case for making Russia pay is obvious. It has waged war without provocation, without regard for civilian life and often in violation of international law. The damage to Ukraine has been huge: the cost of reconstruction has hit $411bn, according to the latest estimates from the World Bank, compiled before the destruction of the Kakhovka dam. These amounts are far beyond the capacity of Ukraine, which now has a gdp about $150bn. Western taxpayers should not have to foot the entire bill.
But it is vital that any steps taken by the West comply with international law. For Ukrainians and their supporters, the war is not just about defending one country against an aggressor but also about maintaining the post-1945 world order, which underpins economic and world security. Whatever the West does with Russia’s frozen assets will set a precedent that will shape global behavior for decades to come.
State assets are protected from seizure under international law, and usually under domestic law, as well. There are exceptions to this doctrine of sovereign immunity, but lawyers have advised America and the European Union that they may not apply in the Russia case. vote in the one The Security Council could provide a clear legal basis for seizing the assets, but Russia has a veto there. Reparations can be part of a peace deal, but that requires agreement from both sides.
What do you do? The best approach includes three steps. The first is to seize the income that Russian assets generate and give it to Ukraine. Euroclear, a Belgian clearinghouse and investor that holds nearly $225bn of frozen Russian assets, makes profits from investing them. Taxing those at 100% could generate over $3bn a year, and it’s legal. At the very least Ukraine could be assured of a recurring revenue stream worth 2% of today’s gdp. As a one-time this is peanuts; received every year forever it is worth having.
The second step is to make a reparation payment by Russia as a condition for the release of its resources (or sanctions relief). Both must go in lock step. Estimates of Russia’s ability to pay should take into account its frozen reserves: think of them as somewhat like collateral held against a future claim. The g7, a group of rich countries, has recently adopted this position. The more countries that do that, the better.
Finally, patient, relentless work is needed to expand the legal case against Russia. It’s still possible to build a waterproof case for instant grip. More votes at the one The General Assembly would help for this: although the assembly can only make recommendations, this can sometimes be considered a stand-in for the Security Council if the latter does not fulfill its main responsibility for international peace and security. maintain national.
At the same time, it is essential to establish a foundation for a future compensation process. It could be the International Court of Justice (etc) or a one A reparations commission like the one set up by the Security Council after Iraq’s invasion of Kuwait in 1990. To try to justify the attack, Russia has claimed that Ukraine was committing genocide against its people. speak Russian in the eastern part of the country. Ukraine wisely asked the etc to rule on this, and the verdict was clear: there was no such ethnicity, so the Russian lawsuit is bunk. The West should continue to support the detailed recording of war crimes and damages to ensure that this evidence is available for any financial struggle.
It would, of course, be simpler to simply seize all of Russia’s frozen assets; but that is what dictatorships do. It is much better to take the legal route, which guarantees a stream of income to Ukraine, gets priority for its claim on Russian reserves and strengthens the already strong case already for compensation. It is possible to help Ukraine, make Russia pay – and comply with international law. ■
