Using frozen Russian assets to rebuild Ukraine
A legal approach to compensate -- and save -- Ukraine
In a recent Foreign Affairs essay co-authored with MIT economist Simon Johnson, I argued that it was essential for the G-7 and allied states to deploy a far-reaching strategy of Ukrainian reconstruction, tied to the ongoing process of EU accession for Ukraine, and funded in part by frozen Russian state and state-related assets.
The legal issue related to frozen Russian assets is important and contested. At an April 28 hearing of the House Foreign Affairs Committee, Rep. Tom Malinowski, who has been leading the legislative push to address Russian assets, asked Secretary of State Antony Blinken if he was looking beyond the issue of oligarch assets to address frozen Russian central bank assets to help rebuild Ukraine. Secretary Blinken said he agreed with this goal. The State Department was, he said, in the process of examining what could be done to utilize these assets, and how. On May 8, Josep Borrell, the EU’s foreign affairs leader, told the Financial Times that he was “very much in favour” of using these funds to rebuild Ukraine, given “the incredible amount of money” involved. “This is one of the most important political questions on the table,” he said. “Who is going to pay for the reconstruction of Ukraine.”
Paul Stephan has critiqued the legality of trying to seize or sell off Russian assets. But much of his fire was directed at a different approach that had been suggested in a New York Times op-ed by Laurence Tribe and Jeremy Lewin. Picking up on Stephan’s well-publicized critique, Roll Call wrote that Biden’s plan to use Russian money “would take an act of Congress and poses some risk to US taxpayers.” If the plan is designed carefully, neither of these statements needs to be true. Here is how, legally, the United States and allied governments might implement the approach I advocated with Johnson.
The approach uses established international law on state countermeasures for wrongful state action, including the precedent of internationally imposed compensation after the 1990 Iraqi invasion of Kuwait. These precedents must be adapted to the circumstances of this major war, which is not likely to end soon. This approach is not meant to coerce Russian behavior, though the procedures should give Russia more chances to meet its international obligations or make a deal with Ukraine. Nor is this approach about punishing Russia. It is about how to compensate, and save, Ukraine.