Transfer the Seized Assets of the Russian Central Bank to Ukraine Now!

This transfer is a morally correct and politically prudent decision.

Ukraine urgently needs more economic assistance both to endure Russia’s full-scale invasion and then to rebuild the country after the war. Many citizens of the world have supported their democratically elected leaders in giving Ukraine billions in economic aid. While the United States provided the most military support, Europe took a strong lead in helping Ukraine meet its economic and humanitarian needs. On top of $1.78 billion in aid for immediate humanitarian relief, the EU has provided $33.5 billion in economic assistance. These efforts of the democratic world to help Ukraine have been heroic. But Ukraine needs more economic support as it tries to provide the basic functions of the state while also rehabilitating critical infrastructure – housing, energy, transport, as well as social and humanitarian services. Just yesterday President Zelenskyy said precisely that while delivering his remarks to address Ukrainian ministers and heads of international institutions. So, in addition to asking American (and Canadian, French, Japanese, etc.) taxpayers to provide more financial assistance for Ukraine’s recovery, the G-7 leaders must transfer the seized assets of the Russian central bank to Ukraine. And now is the time to make this move.

Source: Press Office of the President of Ukraine. Zelenskyy's speech at the third meeting of the ministerial round table on support for Ukraine on April 12, 2023.

Soon after Putin’s Russia invaded Ukraine, the G-7 leaders rightly agreed to freeze roughly half of the Russian Central Bank’s assets, located in their countries. The exact amount of these assets today remains unclear. But at the onset of the war, they amounted to approximately $300 billion, with the largest portions being held in Germany ($96 billion), France ($61 billion), and Japan ($57 billion). The U.S. share is estimated to be $39 billion. However, since the assets got frozen, now more than a year ago, nothing has been done with them. Now is the time to begin transferring them to the Ukrainian government.

Putin and other Russian officials deemed the freezing of Russian assets illegal. They would scream even louder about illegalities if this money were transferred to Ukraine. But Putin is wrong about the legalities, as our International Working Group on Russian Sanctions discussed in detail in this paper: Working Group Paper #5: Why and How to Confiscate Russia’s Sovereign Assets to Help Rebuild Ukraine.

But the gist is as follows: paying reparations for a violation of international law is a well-established norm. And seizing assets of the Russian Central Bank and transferring them to Ukraine is the only realistic and feasible proposal, currently on the table, for how to force Russia to comply with paying reparations. Remember, Russia is one of the five permanent members of the UN Security Council (which, by the way, Russia currently chairs), hence they can always veto any proposals about reparations in that body. Additionally, as we write in the paper, “only clear-cut losers in wars pay reparations.” Two things here: (1) Russia has nuclear weapons and, therefore, as some argue, “cannot be defeated militarily,” and (2) Putin is an autocrat, who will bend the narrative however he wants, whenever it is convenient. For that matter, he might declare that Russia has completed its “special military operation,” and achieved all its military objectives in Ukraine tomorrow, or in a month's time. What is clear, is that Putin will not accept the international community’s verdict that Russia has lost and therefore will never pay reparations.  

Moreover, it would be immoral to give these funds back to Russia. First, Putin violated some of the most central norms of the UN Charter when his army invaded Ukraine both in 2014 and 2022, annexed Ukrainian territory again both in 2014 and 2022, and then committed crimes against humanity against Ukrainian citizens. $300 billion is just one down payment on what Russia must eventually pay for these crimes. Second, Russia’s full-scale invasion of Ukraine, produced a spike in global oil and gas prices, meaning that Russia, a major exporter of oil and gas, profited from starting this war. These windfall profits were well above the value of the seized assets of the Central Bank of Russia. Third, it is immoral to ask American (or European) taxpayers to pay for Ukrainian budget support or eventual reconstruction and not to ask Russians to do the same. In fact, I think it would be political suicide for President Biden to agree to give Russia these billions back while asking Americans for billions more to help Ukraine’s case. This is just simply unfair.

So, instead, President Biden and other leaders of the free world should do the right thing and announce plans to transfer these funds to Ukraine. They could make the announcement tomorrow at the IMF and World Bank meetings happening in Washington DC this week. We published our Working Group Paper #5: Why and How to Confiscate Russia's Sovereign Assets to Help Rebuild Ukraine on October 11, 2022. That was 6 months ago!  It’s time for action now.

When I served in government, I learned that there are always a million reasons not to act. Doing nothing is usually easier than doing something. But leaders find a way to act. We need leadership now on this morally correct and politically prudent decision.