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Should Oligarchs’ Assets Be Seized for Ukraine Reparations?

It might sound good in theory but morally and legally it’s a bad option.
May 26, 2022
Should Oligarchs’ Assets Be Seized for Ukraine Reparations?
Superyacht Suspected Of Being Tied To A Russian Oligarch Docked In The Dominican Republic: The Flying Fox superyacht is seen docked at Don Diego Port on April 7, 2022 in Santo Domingo, Dominican Republic. The superyacht, suspected of being linked to Russian oligarch Dmitry Kamenshchik, has been anchored at the port since March 21 after authorities intervened as part of an investigation into alleged money laundering and arms trafficking. (Photo by Ethan Swope/Getty Images)

At first blush, it seems only fair that some of the sanctioned assets of Russian oligarchs, human rights abusers, and others high up in the kleptocratic Kremlin regime be diverted to help Ukraine rebuild after the war. The principle behind such a reparations scheme seems straightforward: Those who caused so much destruction in Ukraine should be responsible for making their victims whole. But the principles of tort law don’t apply to warfare. Ukraine deserves help rebuilding once the war is over, but assets seized from Russian kleptocrats shouldn’t finance the recovery.

There’s an important distinction to make here: The assets of Russian individuals should be treated differently than the frozen assets of the Russian government. For one thing, the sum of frozen government assets is about ten times that of frozen individual assets, and they’re more liquid. For another, the legal situation is different. There is a lively debate about whether and how various kinds of Russian government assets can be seized or sold. Treasury Secretary Janet Yellen has asserted that the United States has no legal authority to seize Russian sovereign assets, Philip Zelikow argues that there are precedents in international law for using frozen government assets as reparations; Paul Stephan disagrees; and Laurence Tribe argues that the International Emergency Economic Powers Act (IEEPA), the 1977 law that governs how sanctions are applied, empowers the U.S. government with the authority to give Ukraine the Russian central bank assets already frozen in the United States.

But assets taken by the U.S. government from Russian oligarchs shouldn’t be repurposed for reparations. There isn’t a clear legal authority to do so: Under the IEEPA, the president can freeze the assets of foreign nationals under certain conditions, but not seize them. In other words, the executive branch can prevent foreign nationals from moving or accessing their money or other things of value in an emergency to protect national security, but the frozen assets still ultimately belong to the sanctioned person, not the U.S. government.

Congress could try to create such an asset-seizure power and delegate to the president authority to enforce it as he sees fit, but there would undoubtedly be constitutional objections. When sanctioned people or entities have protested that asset freezes violate the Fourth Amendment’s prohibition of “unreasonable searches and seizures” or the Fifth Amendment’s injunction against the denial of “life, liberty, or property, without due process of law,” the courts have usually deferred to the government’s national security prerogatives. But it’s not clear that they would look so kindly on an asset seizure—a more severe action that’s much harder to reverse.

To seize the sanctioned assets of wealthy (or even not-wealthy) Russians would also be to concede that those assets are the legitimate property of their putative owners, which the U.S. government should not do. There’s a reason why the new sanctions task force led by the Justice Treasury Department is called “KleptoCapture”—the villas, yachts, apartments, and other expensive accouterments of the Russian elite are purchased with money stolen from the Russian people. Corruption in Russia, according to some estimates, could account for as much as 25 percent of its GNP. Some of that sum comes in the form of bribes, but much of it accrues by skimming off the government budget into private bank accounts—often in Cyprus, the Cayman Islands, Switzerland, or other tax havens where neither Western law enforcement nor the Russian mafia state can track it. By seizing and rerouting those stolen funds to Ukraine, the U.S. government would in a sense be retroactively recognizing the very corruption it rightly decries.

None of this is to say that Russia and its leaders shouldn’t remain under sanction. Rather, the frozen fruits of Russian corruption should remain frozen until conditions in Russia permit them to be returned to the Russian people—that is, given back to a democratically legitimate Russian government under the rule of law, and ideally one which has accepted and integrated with the European security order. There is precedent for long-term sanctions ending in such a way: The United States froze Iranian assets for more than thirty years, between the Islamic Revolution of 1979 and the Joint Comprehensive Plan of Action of 2015. As a matter of public diplomacy, the United States should make clear that it stands with the Russian people against the predation and corruption of their government, and is ready to return their money to them as soon as it is safe to do so. Meanwhile, sanctions against the Russian government, government-connected businesses and banks, and the Central Bank of Russia should be maintained at least until Ukraine’s full sovereignty over its entire territory is restored.

As for the Ukrainians, there’s every reason to give them a Marshall Plan as soon as the war ends. Unlike the original Marshall Plan, the United States won’t be solely responsible for reconstructing all of Western Europe. Rather, a large community of North American, European, and Indo-Pacific countries will likely be eager to help Ukraine rebuild. And they will deserve our help. They are, after all, fighting and dying to protect freedom and democracy against the world’s greatest threat to international peace. We shouldn’t pretend that the current war is a dispute between Ukraine, the plaintiff, and Russia, the respondent, and find that the respondent must make the plaintiff whole. The plaintiff is on our side. The respondent is an enemy that has already attacked us in numerous ways.

Every day, it looks more likely that Ukraine will win the war. They will need help if and when they do—help that should come not from the ill-gotten property of Russian oligarchs, but from us.

Benjamin Parker

Benjamin Parker is a senior editor at The Bulwark.