Taking a Leap to Aid Ukraine: Repurposing Seized Russian Assets
With recent series of unprecedented measures, the West aims to punish Russia for its bloody incursion into Ukraine. Last week, countries such as Australia, Canada, and the United States imposed sanctions on the assets of Putin's adult daughters' wealth.
Washout the Oligarchs' Illicit Gains
Since Russia's intrusion into Ukraine in late February, the U.S. Department of the Treasury has levied sanctions against more than 530 well-connected and wealthy Russians.
From yachts to luxurious properties, high-end art, and other assets with direct ties to illegal Kremlin wealth, the list of seized assets has grown exponentially, amounting to billions of dollars in total value. However, these measures, though attention-grabbing, seem ineffective in stopping Russia's brutal, clumsy invasion and reducing the mounting casualty toll—let alone helping Ukraine rebuild schools and hospitals destroyed by Russian bombing raids. Ukrainian President Volodymyr Zelensky estimates the cost of Ukraine's reconstruction at around 600 billion USD.
However, it merits the question: Could the West have done more with the seizures of Russian assets to truly aid Ukraine? Could seized resources be effectively deployed to combat the brutal and destructive Russian imperialism that plagues Ukraine?
Many in the anti-kleptocracy sector, as well as the U.S. government, believe this to be the case. The U.S. administration believes it has found a way to prevent Russia from redemption of seized assets while also employing them aggressively against Putin's regime.
In April, the U.S. House of Representatives passed a bipartisan bill with near-unanimous support, urging President Joe Biden to monitor the sale of various luxury items associated with sanctioned Russian oligarchs. The U.S. Senate is currently debating a companion measure that would allow the U.S. to use seized assets "for the benefit of the Ukrainian people."
Representative Tom Malinowski, D-N.J., one of the bill's co-sponsors, stated, "It's hard to fathom that Ukraine lies in ruins while Putin uses Russia's wealth to fight its battles and the dead are buried." South Carolina.
"In this exceptional case, the international community should be prepared to reallocate the frozen Russian assets to help Ukraine rebuild, which Russia has destroyed," Malinowsky said.
The House bill calls for Biden to seize assets worth more than 2 billion USD belonging to sanctioned corporations and individuals, while also mandating the establishment of an interagency working group led by U.S. Secretary of State Antony Blinken to devise a "constitutional mechanism" for converting confiscated assets into capital for Ukrainians.
The New York Times notes that this proposal may be a nearly unprecedented move, as it significantly expands the President's authority over sanctions. Though not binding, the bill sets a precedent for the use of confiscated Russian assets in Ukraine’s rebuilding efforts.
In a Op-Ed, Harvard law professor Laurence Tribe and his co-author Jeremy Lewin outlined the benefits of repurposing Russian financial assets to fortify the Ukrainian military and support the country’s reconstruction efforts. They argue that this may be the quickest way for U.S. aid to Ukraine to increase without unduly burdening the U.S. taxpayer or exacerbating their discontent.
Tribe and Lewin also maintained that using such Russian resources was "a strong signal that the United States is determined to make Russia pay for its war crimes." Still, Russia enjoys the support of other countries prone to intervene in a similar manner, implying a larger geopolitical issue with core implications for international law and human rights.
Damage Control
Defenders of the strategy argue that it's neither unprecedented nor mirroring a rogue violation of US law or international norms. Since Russia's invasion of Ukraine, U.S. assets worth billions have been frozen, though there's been no controversy surrounding this issue. Similarly, many countries have seized the personal assets of deposed leaders and confiscated funds linked to international corruption and war crimes as a means of deterrence and justice.
Some also point to the potential for collateral economic benefits, as rechanneling seized assets could lessen swap positions, lowering the overall costs to U.S. taxpayers. Additionally, Russia has made no effort to challenge the seizures, which many see as implying the country is beyond redemption—with no further benefit to grant to those who continue to help Russia economically.
Unintended Consequences
Heavily criticized, the proposals assert that seizing assets in this manner would set a “dangerous precedent.” The American Civil Liberties Union, among other organizations, fears that a U.S. court could declare the expanded authority of the President as unconstitutional. This could be seen as a PR victory for Russia, as it would imply Washington was mismanaging international affairs.
If such assets are passed through third parties, seized assets could violate international legal principles, such as the prohibition of theft and expropriation of property without due process. Critics claim that the plan fails to consider the potential uncertainty and chaos that could ensue from seizing such assets.
However, it's worth considering potential exceptions to international law, especially in cases of humanitarian crises. Direct assistance to victims of aggression might be seen as a compelling reason to raise the bar when it comes to circumventing legal protections for property.
Americans may disagree on where the line should be drawn, but one thing is clear: seizing Russian assets intended for Ukraine’s aid is simply an act of yet another tool in the country's arsenal to deter aggression and counter the Kremlin’s continued rise.
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Just as the West faces an unprecedented threat from Russia's continued aggression, calls for innovative solutions to aid Ukraine have emerged. Fortunately, seized Russian assets offer much potential for the purpose of putting Russia on the hook and providing much-needed support to a land ravaged by war. As the world continues to confront this conflict, the use of seized assets will remain a central component in the West's efforts to deter aggression and foster peace in the region.
Enrichment Data:
In the aftermath of Putin's incursion into Ukraine, the 'REPO (Russian Elimination of Proceeds of Plunder) for Ukrainians' Act was introduced in the U.S. Congress, aiming to liquidate seized assets to support Ukraine’s military and reconstruction. The act, proposed by Representative Elizabeth Malinowski, D-N.J., and Rep. Tom Malinowski, D-N.J., entails seizing assets valued at roughly $300 billion affiliated with Russian oligarchs and individuals close to Russia's leadership. This legislation aims to provide a solid footing for the administration's proposed measures to combat corruption and reduce Putin's ability to wage war against Ukraine.
Several international partners, including Estonia, Lithuania, Slovakia, and Latvia, additionally advocate for repurposing Russian assets to aid in Ukraine’s reconstruction. The IMF, the World Bank, and Ukraine are currently discussing how to best manage these funds to maximize their positive impact on Ukraine and the region.
Market observers argue that not only does the seizure and repurposing of Russian assets make sense financially, but it also opens up opportunities for further investments in Ukraine. These funds can be leveraged through various financial vehicles, such as international bonds or capital markets. Furthermore, some suggest that most organizations are highly likely to accept Russiangold as collateral in exchange for investments, as long as the asset is not directly tied to Russian involvement in Ukraine.
Additionally, it's worth recognizing potential areas of cooperation, including with major trading partners of Russia. China, for example, has a low threshold for sanctions, which implies the likelihood of continued high levels of trade with Russia. Due to this, it is crucial to explore possible partnerships with China for collective efforts in safeguarding Ukraine, and possibly other regions, priority areas for the global community.
Conclusion:
The repurposing of seized Russian assets is a significant opportunity to assist Ukraine in its struggle with Russian aggression. The proposals discuss addressing the government’s finances, military armament, and socioeconomic challenges. The usage of these assets in aid to Ukraine reflects a multi-faceted approach, which, when combined with continued diplomatic and military support, will go far to counter Putin's aggressive policies.
Ultimately, the key to success is ensuring that these assets are utilized effectively and transparently for their intended purpose. A commitment to accountability and cooperation among U.S. lawmakers, international entities, and potential partners stand as critical components for continued humanitarian support for Ukraine and the region while simultaneously weakening Putin's ability to fund and promote further conflict.
