Common objections, and why they don’t hold.
Critics of asset transfer have raised a series of legal, financial, and geopolitical objections. Each is addressed below on its merits.
- 01Objection
Ukraine should wait until after the war for reparations.
ResponseImmediate rebuilding of critical infrastructure is crucial to keep Ukraine's economy running and for its defense. Ukraine is already owed more than the G7 is holding.
- 02Objection
Transferring sovereign assets violates international law and sets a dangerous precedent of lawlessness.
ResponseRussia has violated two legal obligations: the aggression itself, and the duty to pay reparations. A country is only owed protection for its property when it is abiding by international law. Transferring Russian assets to an international compensation fund is causing Russia to comply with its obligation to compensate Ukraine.
- 03Objection
There is no precedent for transferring the sovereign assets of a state.
ResponsePrecedent for transferring state assets in response to an unjust war already exists. Under these unique and historic conditions, we are forced to reinforce precedent, either by action or inaction.
- 04Objection
Repurposing assets now could complicate future diplomatic negotiations or peace settlements.
ResponseWe must set a good precedent to protect the international rules-based order, to hold the aggressor accountable, and to support victims. Continued delay will encourage further crimes of aggression and undermine the geopolitical order.
- 05Objection
Western governments lack the legal authority to repurpose these assets; no domestic mechanism exists.
ResponseThe US and Canada have already enacted legislation allowing them to seize assets. Lawmakers in other jurisdictions can follow their example in legislating those mechanisms.
- 06Objection
The frozen assets should be held as a bargaining chip to secure a negotiated settlement with Russia.
ResponseThe money to rebuild Ukraine will need to be found, and there can be no bargaining away of Ukraine's legal right to reparations. Russia does not count on getting its assets back; it only doesn’t want them to go to Ukraine. Providing Ukraine with the means to fight greatly increases Ukraine's leverage to make an acceptable settlement.
- 07Objection
Using only the investment profits generated by the frozen assets (as the EU has agreed) is a sufficient and legally safer approach.
ResponseTen years of profits have already been pledged to pay back the $50 billion loan to Ukraine from the G7. Reconstruction alone is estimated at $588 billion. There are no further profits for the foreseeable future..
- 08Objection
Issuing bonds collateralized by the frozen assets is a preferable alternative to transferring the principal.
ResponseThere are no legal or practical advantages to collateralizing the frozen Russian assets as opposed to directly transferring them. At the same time, doing so would raise a significantly smaller amount of funds than would be available to Ukraine via direct transfer.
- 09Objection
Repurposing Russia’s reserves will trigger capital flight from Western financial institutions and destabilize the international financial system.
ResponseWestern countries host 90+ percent of the world’s central bank reserves. There are simply no other viable reserve currencies for countries to invest their reserves. Any negative effects would have already resulted from freezing the assets more than four years ago.
- 10Objection
Russia will retaliate against Western businesses and investors if its assets are repurposed.
ResponseRussia is already seizing assets from G7 investors and is likely to continue even in the absence of the West transferring Russia’s frozen reserves. The companies that continue to operate in Russia make the business decision to do so with full knowledge of the risks, and contribute to the Russian war machine with their taxes.