Since the beginning of the full-scale invasion of Russia, Ukraine has set itself the goal of compensating for the damage caused by the military actions of the aggressor country at the expense of assets located outside the jurisdiction of the Russian Federation in other countries of the world. Already at the beginning of 2024, serious progress has been made on the issue of Russian reparations, and every month the chances of receiving Russian funds increase significantly.
How many assets of the Russian Federation have been frozen and arrested in the world?
As of July 2024, no Russian assets have been officially seized by Western countries. However, a significant amount of Russian assets have been frozen since Russia's invasion of Ukraine in 2022.
Sanctions imposed on Russia have resulted in nearly €282 billion ($303 billion) of Russian Central Bank assets being frozen, with more than two-thirds of this amount under the jurisdiction of the European Union.
The European Union has announced plans to use up to 3 billion euros in profits annually from these frozen Russian sovereign assets to help Ukraine and its military. This approach involves using the proceeds from the assets rather than seizing the assets themselves.
Russia has warned of possible retaliatory measures if its assets are seized. The aggressor country has developed a bill providing for retaliatory measures to the seizure of Russian assets worth about $300 billion by the West.
Debate continues in Western countries about the legality and potential economic consequences of seizing Russian assets, including concerns about setting dangerous precedents and potentially undermining the international financial system.
The Big Seven (G7) decided to support Ukraine
Leaders of the G7 countries met in June to agree to provide financial support to Ukraine through loans that would be repaid from proceeds from the Russian Federation's frozen assets. This step demonstrates the unity and determination of the world community to support Ukraine against Russian aggression.
According to Politico, the United States is tasked with deciding exactly how much money can be allocated in support of Ukraine. President Biden signed the Ukrainian REPO Act, which will allow the transfer of Russian sovereign funds to Ukraine in 2024 for the purpose of rebuilding the country. However, the process is complicated by the need to obtain approval from Congress, where there are significant political differences that could affect the speed of the decision.
The European Union, in turn, has taken steps to minimize risks for the United States, offering several options for action. However, the final decision will depend on the political leadership of each country, which introduces some uncertainty into the process of determining the volume of assistance to Ukraine.
This G7 initiative is key for Ukraine in light of its needs for defense financing and rebuilding infrastructure damaged by military action. At the same time, the success of this initiative depends on the ability of international partners to find consensus and effective mechanisms for implementing financial support plans.
Ukraine expects first payments from proceeds from frozen Russian assets in the EU this summer
As reported by Bloomberg, according to the information provided in the final communiqué of the European Union summit, Ukraine can expect the first funds from the income received from the assets of the Russian Federation blocked in the EU this summer. The move is part of the European Union's broader strategy to provide military, budgetary and reconstruction assistance to Ukraine.
After the adoption of the relevant EU legal acts regulating the allocation of these funds, the European Council expressed the hope that the first transfers of funds will be made in the summer. These funds will be used to support the defense sector of Ukraine, its budget, as well as the process of rebuilding the country after the destruction.
EU leaders have also instructed the European Commission and other European institutions to work to provide Ukraine with $50 billion in additional funding. The funds will be provided in the form of a loan secured by frozen Russian assets, a significant step in supporting Ukraine.
According to the document, frozen Russian assets will remain blocked until the Russian Federation ceases military actions against Ukraine and compensates for the damage caused.
These steps by the European Union open up new prospects for Ukraine in military, budgetary and reconstruction support. The first payments from the proceeds of frozen Russian assets will make a significant contribution to the country's defense capabilities and its recovery efforts. At the same time, this initiative emphasizes the importance of international solidarity and support for Ukraine in its struggle for sovereignty and territorial integrity.
Creating a precedent for paying reparations to Ukraine from the Russian Federation
Ukraine is on the verge of creating a historical precedent that can change modern approaches to responsibility for military aggression. According to the Minister of Justice of Ukraine Denis Malyuska, receiving reparations from the Russian Federation even before its defeat in the war is quite realistic and does not have any technical obstacles.
This issue became especially relevant after plans were announced at the European Union summit to channel proceeds from blocked Russian assets to support Ukraine. This decision opens the way to the implementation of a compensation mechanism for damage caused to the aggressor country.
Minister Maluska noted the importance of creating a compensation fund, which will maintain a register of damage caused and distribute assets. According to him, the absence of the need to create a special tribunal or an international mechanism indicates the possibility of applying the national legislation of countries to resolve this issue.
Dr. Patrick Heinemann, a German international lawyer, emphasized that international law already provides grounds for Ukraine's demands for reparations from Russia. He noted that Russia's responsibility for the damage already exists, and the country is obliged to pay reparations even before a peace agreement is concluded.
The initiative to obtain reparations from Russia will not only reduce its resources for waging war, but will also serve as a deterrent to other totalitarian regimes. This creates an important precedent demonstrating the inadmissibility of aggression and the need to compensate for the damage caused.
Negotiations between the G7 countries and other international partners will be decisive in determining the future volume of financial support for Ukraine and the mechanisms for its implementation. Joint efforts and diplomatic debate will help reach an effective solution that will help Ukraine confront the challenges posed by the war.
Ukraine's reparations initiative could become a watershed moment in international law and relations, highlighting the importance of accountability for war crimes and aggression. The successful implementation of this mechanism will not only help Ukraine in its recovery, but will also strengthen global security.
