There Is Money for Ukraine

In early December, the U.S. Senate blocked the adoption of a bill to provide financial assistance to Ukraine and Israel due to Republican insistence on stricter immigration controls on the U.S. border with Mexico. This incident has once again raised the issue of finding external resources needed for Ukraine's security needs and post-war recovery. One such tool, which would not burden the budgets of Ukraine's allies while causing significant losses to Russia, is assets frozen in the West and funds belonging to the Russian Central Bank, Russian state-owned companies, and Russian oligarchs under sanctions.

Back in March 2022, the G7 countries, the EU, and Australia established the Working Group on Assets of Russian Elites, Proxies, and Oligarchs (REPO), within which they pledged to "take all available legal steps to limit, freeze, seize and, where appropriate, confiscate the assets of the individuals and entities sanctioned as a result of Russia's deliberate, unprovoked and unjust invasion of Ukraine."

So far, the group has been seizing specific assets belonging to Russian oligarchs (in particular, it facilitated the seizure of Roman Abramovich's two airplanes) and confiscating income from Russian assets in favor of Ukraine, but not the assets themselves. While there are no limitations against using assets estimated at more than $300 billion, the confiscation of akin assets is considered too radical a step, and no G7 country has dared to take personal responsibility for it.

Overall, according to the European Commission, assets of private Russian companies worth almost 28 billion euros and 207 billion euros belonging to the Central Bank of the Russian Federation have been seized in the jurisdictions of the EU member states. Of these, approximately 125 billion euros belong to the Belgian company Euroclear. According to the Belgian government, these assets will generate €2.3 billion in 2023-2024, which could help Ukraine.

The US and EU Are Looking for Legal Mechanisms to Transfer Funds to Ukraine

Procedural issues are a subject of discussion in both the U.S. and the EU. Discussions are taking place at the highest level. For example, recently, U.S. Senator Michael Bennet of Colorado joined his colleagues from both houses of Congress to introduce two bills on freezing Russian assets to provide additional assistance to Ukraine. 

The Asset Seizure for Ukraine's Recovery Act would allow the U.S. Department of Justice to quickly seize valuable assets belonging to sanctioned Russian oligarchs through existing administrative forfeiture procedures and transfer the proceeds of those assets to Ukraine. 

The Restoring Economic Prosperity and Opportunity for Ukrainians Act (REPO) provides additional assistance to Ukraine using assets confiscated from the Central Bank of the Russian Federation and other sovereign assets of the Russian Federation.

“Over the past two years, the Ukrainian people have made tremendous sacrifices in the name of democracy. They are winning on the battlefield, and we cannot let them down on Capitol Hill,” said Bennet. “Putin and his oligarchs are directly responsible for the death, destruction, and dislocation wrought by their illegal war in Ukraine. These bills will make Russia pay by directing funds from their seized assets to support Ukraine’s reconstruction and recovery.”

The REPO Act would give the President of the United States the authority to seize Russian sovereign assets frozen in the United States and transfer them to help rebuild Ukraine. In addition, the law would prohibit the allocation of funds to sanctioned Russian entities until Russia withdraws from Ukraine and agrees to provide compensation for damage caused by the war. It also would provide the U.S. Department of State's Office of Sanctions Coordination with additional resources to work with partners abroad to confiscate Russian sovereign assets in other countries.

At the same time, on December 12, the European Union executive body, the European Commission, approved a legislative proposal to use the proceeds of Russian assets frozen under sanctions. The decision came two days before the last EU summit of the year, which will consider the provision of billions of euros in budgetary and military aid and the promotion of Ukraine's membership application. Unfortunately, the approval of this document does not mean that Ukraine will automatically receive the funds. Despite the assurances of France, Germany, and Belgium to support an akin step, there are doubts about the sufficiency of one document to justify using proceeds from Russian assets in favor of Ukraine.

The European Commission's proposal aims to introduce standardized rules for such assets in all EU countries. It requires the unanimous support of 27 EU member states. According to Brussels, the proposal clarifies the legal obligations of the institutions involved and instructs them to keep the frozen Russian assets in this status until Russian troops withdraw from Ukraine and Russia pays compensation for the damage caused by the war. 

In this respect, the European Commission's proposals coincide with the position of the American side. The European Commission's draft decision will also include a provision that no new revenues from frozen Russian assets will be transferred to the EU budget. In this way, officials are insuring against possible risks of lawsuits and are taking into account the proposals of the European Central Bank.

There is money to rebuild Ukraine. It can be obtained through the use of Russian assets. All that is needed is an adequate mechanism for the use of these funds in favor of Ukraine under the control of the allies. 

So, we need to streamline the procedures.