Why Process of Confiscating Russian Assets Challenging but Inevitable

Representatives of the Ukrainian government, including President Volodymyr Zelenskyy, in recent weeks, have regularly discussed the prospects of confiscating Russian assets abroad and urged allies to make such decisions.

Apparently, seizing Russian assets ($300 billion reserves of the Russian Central Bank) is becoming the main political goal/hope/plan for 2024 in the confrontation with Russia.

The legal mechanisms proposed in the US REPO bill is based on the ideas of their application, and a group of prominent international lawyers led by Dapo Akande and Philippe Sands proposes to apply them in a yet-unpublished memorandum.

Read more in the article by Ivan Horodyskyy, Director of the Dnistrianskyi Center – Challenges of Confiscation: What Will Help Ukraine Achieve Transfer of Russian Assets.

The first problem is the leadership in the confiscation process. While Brussels expects this from the United States, representatives of the States point to the EU as the largest distributor of frozen Russian assets.

The reason for this is that everyone is afraid of aftershocks to their own currencies and economies as a result of this decision.

Political uncertainty leads to fear of decision-making and may result in their postponement.

Secondly, the political context of the 2024 election plays a huge role.

The US Congressfears of passing the REPO bill to potentially not give additional powers to Donald Trump in case of his re-election as president. The EU faces difficult elections to the European Parliament, as well as Hungary’s presidency over the EU and the potential role of its Prime Minister Viktor Orban in the European Council.

Political uncertainty leads to fear of decision-making and may result in their postponement.

“And the third problem is that the basic scenario for compensating Ukraine is not confiscation but the voluntary payment of reparations by Russia.

Although we all understand that such a prospect is unrealistic, it means that the decision on seizing is likely to be made by Ukraine’s allies only after Russia definitively refuses voluntary compensation. This refusal must be recorded during political settlement, regardless of when and in what format it begins.

Even the most political decision may prove insufficient.

In addition to the political decision on the confiscation of assets, the next stage is critical: the implementation of the confiscation decision. It will not be automatic and quick, even if the decision is adopted.

This can be seen in the example of already announced assets that were supposed to be transferred to Ukraine.

In the case of the Russian asset confiscation and subsequent use for compensation to Ukraine, it is worth considering a plan that provides a real understanding of what to do and what to expect.

If an attempt is made to draft such a manifesto for confiscating Russian assets, it should first declare and justify the inevitability of the confiscation of frozen Russian assets and build a strategy where decisions on this are final.

In this context, it is essential to clearly define the goals of such confiscation.

It is important to focus not only on the decision to confiscate assets but also on a plan for further actions and steps regarding their use and transfer to Ukraine.

It is important to continue working on creating an international compensation mechanism, which can become an institutional platform for the use of confiscated assets.

The process of confiscating Russian assets will be difficult, challenging, and lengthy.

But at the same time, it will be inevitably successful.