The second year of the Russian Federation's full-scale invasion of Ukraine is coming to an end. During this time, millions of Ukrainians around the world have witnessed a significant number of historical events with their own eyes. Some are writing the history of our nation by being at the frontlines as a part of the Armed Forces of Ukraine, some are doing the same from the stands of authorities, international organizations, summits, etc. This study will focus on the latter, or rather on the results of their fruitful work in the international arena and one of the most important challenges related to the future of our state – restoration.
The international community has been extremely effective in their actions concerning economic issues since the first days of the invasion. The elite of the Russian officials and oligarchs was hit by the impact of the sanctions instantly. The international ambitions of the largest Russian banks in Europe and beyond were destroyed by its banishment from SWIFT, which is widely believed to be an achievement of the Ministry of Foreign Affairs of Ukraine.
It is known that the majority of the frozen Russian funds are currently stored in the countries of the European Union. Most of them (197 billion euros) are blocked in the largest European depository, Euroclear in Brussels, Belgium [1]. It has to be noted that frozen assets are working and generating profits, which could totally be used in Ukraine’s interests. Therefore, a significant number of lawyers in the whole world is working on a solution to the named issue at this exact moment.
Thankfully, the results were not awaited for long. According to Bloomberg’s latest reports, on 12 December, the European Commission is going to publish the final draft of a plan on possible ways to use the Russian assets frozen in the EU for the benefit of Ukraine. The Commission tentatively plans to unveil its legislative proposal to impose a windfall tax on profits generated by the frozen assets. The draft plan would clarify that the EU proposal won’t interfere with national taxes or other measures [2]. A strong message, conducted with such initiative, may result in positive changes in the positions of other states which are currently holding frozen assets of a terrorist state.
It has to be mentioned that in recent months, the European Union has been active about discussing the matter of the implementation of the possibility of applying a tax on excess profits from Russian assets and directing these funds to the recovery of Ukraine. This can only be viewed as a sign of a long-awaited support from Ukraine’s partners. The EU is working hard to provide all the necessary actions to its second newest candidate.
Menno T. Kamminga believes that freezing Russia’s foreign Central Bank assets was a reversible measure aimed at inducing Russia to cease its aggression against Ukraine, so it was permissible as a third-party countermeasure aimed at the cessation of a serious breach of an obligation under a peremptory norm of international law, while confiscation of such assets would not qualify as a countermeasure because it would be an irreversible measure aimed at repairing the damage done to an injured state. This conclusion is supported by an existing precedent, which is the state practice consisting of freezing measures previously taken by the member states of the European Union and other states against the foreign assets of the central banks of Afghanistan, Iran and Syria [3, p. 14].
I consider the above-mentioned theoretical aspects to be completely true. They may also serve as an explanation to certain actions of the European Union and reasons they decided not to use confiscation as one of the sanctions.
Anton Moiseienko proposed two more options in dealing with frozen Russian assets: claims against private persons and enforcement of a foreign judgment or international award [4, p. 36]. However, implementation of such mechanisms would require the reformation of sovereign immunity rules, which may take a colossal amount of time as well as just effort. I can also see international community strongly opposing to this initiative, as amendments to all the national legislations would need to be provided.
In conclusion, the problem of supporting Ukraine’s restoration is yet far away from being solved. Nevertheless, many massive players on international arena have made their intentions clear by conducting activities in the aspect of sanctioning Russian Federation: Belgium has created a special fund to help Ukrainians with the usage of the frozen assets, the Committee on Foreign Affairs of the House of Representatives of the US Congress by a majority of votes has supported a draft on the use of frozen assets for aid to Ukraine, Canada has implemented the confiscation of assets of persons subject to sanctions into its legislation. If this tendency progresses and expands over the time, a new prevention mechanism might be developed, so the world knows fewer terrorist states throughout its existence.
References:
1. Laura Dubois, Nikou Asgari Euroclear earns €3bn from Russian assets frozen by west, Financial Times, 2023. URL: https://www.ft.com/content/88ff88c4-6efe-40b7-b635-80eb6bd73c2c
2. Stephanie Bodoni, Jorge Valero EU Aims to Unveil Plan to Tap Frozen Russian Assets Amid Doubts, Bloomberg, 2023. URL: https://www.bloomberg.com/news/articles/2023-11-30/eu-aims-to-unveil-plan-to-tap-frozen-russian-assets-amid-doubts
3. Menno T. Kamminga Confiscating Russia’s Frozen Central Bank Assets: A Permissible Third‑Party Countermeasure? 2023. URL: https://link.springer.com/article/10.1007/s40802-023-00231-7
4. Anton Moiseienko Frozen Russian Assets and the Reconstruction of Ukraine: Legal Options. 2022. URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4149158
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Supervisor: Tetiana Poharchenko, PhD in Law, Associate Professor Department of International, Civil and Commercial Law, State University of Trade and Economics, Kyiv
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