The USA is considering how to legalize financing for Kyiv from the frozen assets of the Russian Central Bank. One of these ways can be the recognition of European states as “affected by the conflict”. And in the future, they can transfer funds from the Russian Federation in tranches through the World Bank or the European Bank for Reconstruction and Development (EBRD).
The publication, referring to one of the G7 documents, reports that although the US authorities do not publicly support the confiscation of Russian assets, such “countermeasures”, in their opinion, should encourage Moscow to stop aggression. According to the document, this step will be considered legal from the point of view of international law, if it is carried out by states that are “affected” and “especially affected” by the conflict.
It is assumed that among such states will be allies of Ukraine, which financed its economy and armed forces during the conflict, notes the FT.
A former high-ranking American diplomat, Stanford University professor Philip Zelikov, in a conversation with the FT, gave an example of international compensation after Iraq’s invasion of Kuwait in 1990.
“We spent almost two years wading through the legal thickets, and now we can start looking at the options available to us. If this works, the money at stake — $300 billion — will be a game-changer for Ukraine.”
Ingrid Brunk, a professor of international law at Vanderbilt Law School, notes that such countermeasures are not a method of obtaining compensation. They should push Russia to fulfill the requirements.
“Many countries have already suffered losses due to violations of international law, not to mention our confiscation of foreign exchange reserves. These are the most sacred types of assets in the global financial system,” she said, calling this idea unreasonable.
What is known about the withdrawal of Russian assets for the benefit of Ukraine.
At the end of April 2022, the House of Representatives of the US Congress approved a bill that provides for the confiscation of frozen assets of Russian sanctioned legal entities and individuals. The withdrawn funds are proposed to be used to provide additional military and humanitarian aid to Ukraine.
On June 24, 2022, the Canadian Senate approved a bill that provides for the possibility of confiscating Russian assets.
On November 18, 2022, the European Union froze 68 billion euros of Russian assets, according to an internal European Commission document. Currently, the European Union is studying the possibility of directing some of the frozen assets of the Russian bank to rebuild Ukraine. Discussions are at an early stage because such steps require a review of the legal framework.
On November 30, 2023, the Prime Minister of Ukraine, Denys Shmyhal, reported that a draft law was submitted to the United States Congress on the seizure of frozen assets of Russia in favor of the restoration of Ukraine.
In July, it was reported that European Union leaders supported plans to impose a windfall tax on more than 200 billion euros of frozen assets of the Central Bank of the Russian Federation to help rebuild Ukraine.
In October, the Estonian authorities approved and sent to the parliament an amendment to the law on international sanctions, which, among other things, provides for the use of frozen Russian assets to compensate for damages caused to Ukraine due to the war.