Ukraine is lobbying the UN general assembly to adopt a resolution that would form the basis of an international compensation mechanism that could lead to the seizure of up to $300bn (£260bn) of Russian state assets abroad. The US Justice Department said in June that the US and its allies have frozen $30 billion in Russian elite assets and $300 billion in Russian central bank assets held abroad. Ukraine’s Deputy Justice Minister Iryna Mudra was in London last week to discuss the matter with the Foreign Office after lobbying the Council of Europe Council of Ministers in Strasbourg alongside Olena Zelenska, wife of Ukrainian President Volodymyr Zelenskiy . A former banker, Mudra has been at the helm of the detailed legal and political discussions on reparations, holding talks in Germany, Paris and Brussels and with US Assistant Treasury Secretary Elizabeth Rosenberg. At the end of the last meeting in Strasbourg, Council of Europe ministers supported the principle of reparations, but issued a tepid statement on Ukraine’s specific proposals, saying they “noted with interest the Ukrainian proposals to create a comprehensive international reparations mechanism , including, as a first step, an international damage register’. US Treasury Secretary Janet Yellen said the refunds would be illegal under current US law. But Ukraine has become increasingly adamant that any definition of military victory must include Russian agreement on reparations, a demand that Moscow will resist and complicate any peace talks. The issue is separate from establishing a legal mechanism to hold Russian leaders accountable for war crimes. Those close to the reparations talks in London had the impression that British enthusiasm in principle for the plan was being weighed against potential legal and property rights issues. It is argued that if the assets of the Russian central bank are appropriated, as opposed to simply being frozen as at the moment, any Western assets held abroad could also become the spoils of seizure. State property is protected abroad under the doctrine of state immunity, a principle ratified in the UN Articles in 2011 that grants a foreign state immunity from the jurisdiction of domestic courts, at least with respect to non-commercial activities. In May, in collaboration with Columbia Law School, Ukraine created an International Claims and Reparations Project including British lawyer Alison Macdonald, former State Department legal adviser Jeremy Sharpe and two Columbia professors, Lori Damrosch and Patrick Pearsall. They claim there is a history of seizing Russian state assets, citing compensation claims against Iraq after the invasion of Kuwait, compensation paid by Iran to the US for the embassy hostage crisis and the recent US seizure of Afghan central bank assets. Ukraine accepts that currently Russian state assets abroad enjoy sovereign immunity, but believes that this can be changed through national legislation, as happened in Canada. He says a second process is needed to seize assets of Russian companies or oligarchs. Yellen’s claim that the US does not have the current legal authority to seize Russian assets is partly because the US is not engaged in armed hostilities with Russia and the US does not dispute Russia’s legal ownership of the assets. Others say the US could develop the Trading with Enemy Act or the International Emergency Economic Powers Act. The compensations have been endorsed in a joint statement issued by the finance ministers of Estonia, Latvia, Lithuania and Slovakia. Liz Truss, as foreign secretary, expressed her support for the idea in principle, but has not repeated the proposal recently. British and European sanctions legislation allows states to freeze assets of the Russian central bank and some oligarchs, but does not provide for permanent seizure, let alone their unilateral transfer to a fund for the reconstruction of Ukraine.
