Yahoo Finance Diane Francis: Making Russia pay should not be a matter of debate
This month, G7 leaders will discuss how to confiscate over US$300 billion ($404 billion) in Russian assets that were frozen after Moscow’s invasion of Ukraine on Feb. 24, 2022. But the proposal has hit some legal and political roadblocks.
Some nations worry because Russia has threatened to retaliate against any country that seizes its deposits. Others argue that, unless it can be proven that the money comes from the proceeds of crime, such seizures undermine the rule of law and may destabilize the banking system.
But making Russia pay should not be a matter of debate. The invasion of Ukraine was an outrageous crime, and it is estimated that reconstruction will cost Ukraine anywhere from US$400 billion to US$750 billion.
Given that Moscow has stolen the assets of foreign companies that have decided to leave Russia since the war began, it’s hard to argue that a tit-for-tat response from the West would not be justified. Seizing Russia’s wealth is not about legalities. It is about justice and morality.
“My advice to governments is to focus on the Russian central bank reserves, which I think is a much easier case to make because these reserves belong to Russia. Russia has committed a crime. The crime is provable, and it is easily provable. And the damage has already been calculated, and we have custody of the assets,” said American investor Bill Browder, a long-time critic of Russia, in an interview with the Kyiv Independent.
He has been a vocal supporter of the Magnitsky Act, which allows governments to freezes the funds of corrupt individuals and human rights abusers. “I spent 13 years working with governments and parliaments all over the world to freeze Russian assets connected to human rights abuse. It’s not a big stretch to use the same networks in the same relationships to seize (Russia’s) central bank reserves,” he said.
Former World Bank president Robert Zoellick agrees. Writing in the Financial Times, he argues that countries shouldn’t hesitate to take advantage of these assets, as there’s no real risk to international financial stability.
Moreover, Zoellick contends that, “If countries believe that they cannot conquer and annex their neighbours without losing access to their global reserves, that is a good thing.”
The United States is pushing the G7 and European leaders to seize these funds, claiming that a precedent was set when coalition forces seized US$926 million of the Iraqi regime’s assets after their invasion, and other nations froze US$3.7 billion in assets, with the United Nations Security Council’s approval.
A bill currently before the U.S. Senate, dubbed the REPO act, would allow the secretary of state to confiscate Russian assets and hand them over to Ukraine. “For almost two years, Russia has committed unspeakable crimes in its illegal, unprovoked invasion of Ukraine. Russia should pay to rebuild Ukraine, and U.S. leadership is essential to spur action,” said Sen. Jim Risch.
“The REPO act provides that leadership by giving the president authority to seize Russian sovereign assets frozen in the U.S. and transfer them to Ukraine for its reconstruction. It also directs the president to work with other partners and allies to take similar action. It is critical the international community rises to this occasion and holds Russia accountable.”
Last week, Josep Borrell, vice-president of the European Commission, said that European leaders had reached an agreement in principal to seize US$16.2 billion in frozen Russian assets and transfer them to Ukraine. But several European countries are against confiscating all the assets Russia currently holds in the European Union.
The plan to confiscate frozen Russian assets is being pushed by the United States, United Kingdom, Japan and Canada. Ottawa froze US$16 billion in Russian deposits at the start of the war. Since then, it has confiscated a Russian-owned heavy-lift cargo jet to transfer it to Ukraine, and started the process to confiscate $26 million worth of assets owned by sanctioned Russian oligarch Roman Abramovich.
Britain has frozen US$20.5 billion worth of assets held by Russian oligarchs, individuals and businesses that have been sanctioned because of the Ukrainian invasion. British Foreign Minister David Cameron bluntly explained the importance of this issue: “Let’s take that money, spend it on rebuilding Ukraine and that is, if you like, a down-payment on reparations that Russia will one day have to pay for the illegal invasion that they’ve undertaken.”
