Nigel Gould-Davies
In February 2022, Western governments immobilised (or ‘froze’) an estimated US$300 billion of Russian central-bank assets in response to Russia’s invasion of Ukraine. The United Nations, G7, European Union and other bodies have since called for Russia to compensate Ukraine and other parties for injury caused by its invasion. This has sparked a major policy debate: should Russia’s frozen assets be used to enforce this compensation, and if so, how?
While rapid consensus was achieved on freezing Russia’s assets, opinion on their subsequent use remains divided. But the debate is shifting. In recent months, several proposals have been floated. These range from using the profit on interest earned by the assets for Ukraine’s reconstruction (a move agreed by the EU in May); to various schemes to collateralise the assets, or interest on them, for loans to Ukraine; to full seizure of the assets and their transfer to Ukraine. These options would yield roughly US$3bn a year, US$50bn in total and US$300bn in total, respectively.
Full seizure is the clearest and simplest option. It would provide more funding, more quickly and more directly, than any other. Some governments have expressed reluctance to take this step for fear it would breach international law. This is a serious and legitimate concern. Western states and their partners rightly value the rule of law as a fundamental principle of international order. Seizing Russian state assets therefore requires a clear legal justification that is accepted by the governments that would carry this out.
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