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Rebuilding Ukraine after Russian President Vladimir Putin’s unprovoked invasion and a year of unrelenting Russian military assaults will require far more resources than can be obtained from just seizing Russian oligarchs’ assets. It’s time to go after Russia’s foreign hard currency reserves.
The United States and its allies have already isolated the Kremlin with a strong sanctions program, barring it from international markets. However, sanctions alone aren’t enough. Congress recently passed legislation equipping the United States with the ability to seize frozen assets belonging to Russian oligarchs. But that, too, won’t be nearly enough.
It’s likely to cost more than $600 billion to rebuild Ukraine, the World Bank and the government of Ukraine estimated in December. Meanwhile, the damage is mounting as Russia continues to target critical infrastructure. The United States should coordinate with its allies in seizing an additional $300 billion in Russian foreign hard currency reserves, 10 times the value of the foreign assets of the country’s oligarchs.
Confiscated Russian assets would be able to cover more than half of Ukraine’s damage assessment, alleviating the economic pressure on the international community to provide Ukraine with much-needed financial assistance in military support, short-term recovery and longer-term reconstruction efforts. These foreign reserves belong to the Russian Federation, so seizing them would also hold the Kremlin responsible for the war.
Make no mistake, the cost of the war is high and growing fast.
While Ukrainians put their lives on the line in the fight for sovereignty, the United States and the international community have committed to providing much-needed financial assistance, promising $110 billion for immediate military, budgetary and humanitarian aid. Congress has authorized the confiscation of oligarch funds, which account for over $30 billion of that amount. That’s a step in the right direction and one that will take time to fully achieve, so we must go further.
Washington must continue supporting Ukraine while holding the Kremlin accountable for its invasion. Western states have already frozen over $300 billion of Russia’s foreign reserves. The international community should also punitively confiscate frozen Russian government assets to fund Ukrainian objectives via coordinated action by the Group of Seven (G-7) countries, which hold the bulk of the frozen assets.
Because Moscow has violated international law with reported acts of genocide and crimes against humanity, seizing the Kremlin’s assets is a matter of justice and accountability. It would also place the financial burden of the war firmly where it belongs — on Moscow.
The financial power held by the United States and its G-7 partners is the best asymmetric weapon we have against Putin.
Seizing the Kremlin’s reserves would apply economic pressure on Russian finances already strained from sanctions, stymieing Russia’s military capabilities, depriving its supply stock, and restricting its ability to fund the war effort.
Financial pressure by the G-7 would worsen the Kremlin’s position and economic resilience while providing critical support for Ukraine at a time when Putin may be preparing for a new offensive.
The United States already has the authority to expropriate Russia’s central bank reserves under the International Emergency Economic Powers Act (IEEPA), the Terrorism Risk Insurance Act (TRIA), as well as the Trading with the Enemy Act (TWEA). IEEPA and TWEA give the U.S. government the ability to freeze and seize Russian assets, while TRIA grants a president who chooses to designate Russia as a state sponsor of terrorism the power to obtain funds frozen under TWEA or the IEEPA. Putin’s invasion of Ukraine provides ample justification for the United States to invoke all three laws.
Precedent also supports Russia compensating Ukraine for war damages. Following Iraq’s 1990 invasion of Kuwait, the United Nations Compensation Committee, a Security Council subsidiary, was established to oversee reparation payments by Baghdad totaling $52.4 billion. Iraqi assets were also used for reconstruction under IEEPA in 2003.
It wouldn’t be the first time the laws were used to retaliate for Russian activity. IEEPA has already been leveraged twice against Russia in the past decade: during Russia’s 2014 annexation of Crimea and in 2021 due to “harmful foreign activities” against the United States.
The invasion of Ukraine is one of the most egregious attacks on freedom since World War II. In conflict after conflict, beginning with the second Chechen war, Putin has proven his capacity to impose oppression and tyranny. He has reportedly silenced opposition, occupied territory, assassinated political opponents and aided murderous regimes — all with insufficient repercussions from the international community.
Seizing Russia’s frozen central bank assets would enforce international laws against crimes of aggression and the systematic violation of human rights.
Putin’s despotism has gone unpunished for too long. Moscow’s attack on Ukraine must be where the bloodshed stops.
Albert Torres is associate of freedom and democracy at the George W. Bush Institute.