The case for seizing Russian assets to rebuild Ukraine

There is a logic and a certain poetic justice to the idea of ​​using frozen Russian assets to finance the reconstruction of Ukraine. Russian forces caused tens of billions of dollars in damage in an unprovoked attack on their neighboring country and perpetrated atrocities against Ukrainians. The moral arguments for ensuring that the ‘aggressor pays’ are powerful. However, to maintain high moral standards, democracies that support Ukraine must respect due process and the rule of law.

There are several complications. Freezing assets – depriving owners of their use – differs legally and practically from confiscating and redistributing them. Under international law, the assets of convicted war criminals can be seized to compensate victims. No such verdict yet exists against senior Russian officials, although Moscow has defied an interim order from the International Court of Justice to suspend military action. Despite all their support for Ukraine, the Western allies are not themselves at war with Russia.

Two avenues are being explored: confiscating the already frozen accounts, yachts and mansions of the oligarchs linked to Putin, and sequestering state assets – especially the $300 billion in frozen Russian central bank reserves held abroad . Canada has become the first G7 country to pass legislation that would allow it to redistribute frozen Russian assets to compensate war victims. As part of the latest $40 billion US aid package for Ukraine, President Joe Biden is asking Congress to authorize the seizure of the assets of sanctioned Russian tycoons.

In the EU, a ‘freeze and seize’ working group is examining a similar approach. But some EU states, including Germany, have legal or constitutional limits on confiscating assets, especially without a criminal conviction of the owner. Brussels is working to make circumventing sanctions — by transferring assets to other jurisdictions, for example — a criminal offence, which could pave the way for confiscations. But a number of Russian tycoons have already launched potentially lengthy lawsuits against the sanctions imposed on them, daring governments to demonstrate that they have genuine ties to the Kremlin.

The moral case for confiscating public assets such as central bank reserves may be clearer, and these represent a more lucrative target. The United States has seized Iranian and Afghan assets in the past, but in part to fund damages to American victims of terrorist attacks. Although the president is empowered by a 1977 law to freeze assets held by foreigners, he can confiscate and redistribute them only if America “is engaged in hostilities or has been attacked” by the country in question.

The Biden administration could seek legislative approval from Congress to requisition Russian sovereign assets. This would require careful framing to withstand future judicial review, including whether it is constitutional.

The risk of setbacks and legal reversals is no reason, however, for governments not to try to use Russian “treasury” abroad to compensate Ukraine. Checks and balances are an integral part of a rule-based democracy. It is important to be seen to comply with legal standards, even in response to exceptional events, to maintain the confidence of global investors, private and sovereign, in the Western financial system.

The United States, its allies, and Ukraine itself are, after all, fighting to defend the rules-based global system as the foundation of peace and security in the face of aggression from Moscow. This should include holding Putin’s Kremlin accountable, legally and financially, for the human and economic toll of its war – but not at the cost of compromising the values ​​the West claims to uphold.

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