Seizing Russian Assets: Too Little, But Not Too Late

This article is a contri­bu­tion to a dossier on sanctions that the Center of Liberal Modernity publishes in the run-up to its annual confer­ence Russia and the West on 15 May.

A German version has been published on Russland verstehen

Ukraine and some of her allies have been campaigning to use the frozen 200 billion dollars of Russian Central Bank money held at Euroclear in Belgium for aid to Kyiv, but there are legal and political reser­va­tions. Patrick Heinemann explains, why the money can and should be used swiftly.

Germany is doing a lot. But not enough. And that is what matters. German foreign and security policy makers are masterful at explaining to them­selves and their partners what is suppos­edly impos­sible. However, they rarely take their own initia­tives. What applies to military aid to Ukraine applies all the more to the handling of Russian state assets. Some 300 billion euros of Russian Central Bank currency reserves are currently held in accounts in the G7 countries. This money has been frozen for around two years due to sanctions and the Kremlin has no access to it. The lion’s share, around 200 billion, is held by the ‘Euroclear’ clearing house in Belgium.

There is no evidence that Russia will pay reperations

According to the prin­ci­ples of state respon­si­bility under inter­na­tional law, the Russian Feder­a­tion already owes Ukraine repa­ra­tions for the damage caused by its war of aggres­sion. According to a World Bank estimate, these damages amount to 486 billion dollars as of 31 December 2023. Thus, Ukraine’s claim to repa­ra­tions already exists irre­spec­tive of any special regu­la­tions on this in a later peace treaty with the Russian Federation.

Currently there is no evidence for this at all: Russia is waging war with the aim of erad­i­cating Ukraine as a subject of inter­na­tional law. The Kremlin is currently moving closer to this goal again because the West’s support for Ukraine’s fight for freedom has not been strategic, i.e. not sustain­able and long-term. There is no apparent forum in which Ukraine could assert its claim. In partic­ular, the UN Security Council, which author­i­ta­tively regulated repa­ra­tions by Iraq for Kuwait in the early 1990s, is no option because of Russia’s veto.

As is so often the case, inter­na­tional law is therefore dependent on decen­tralised enforce­ment, i.e. relations between states. For the people of Ukraine, it is vital that their claim is realised soon and not just at some future point. For Ukraine, justice denied is justice delayed means at worst: to be or not to be.

The legal reser­va­tions raised against the confis­ca­tion of Russian central bank assets are ulti­mately not convincing. We keep hearing that the West insists on a rules-based order and therefore cannot simply break the rules itself. This supposed argument does not explain why the confis­ca­tion of Russian Central Bank assets should be illegal, but simply presup­poses this. The starting point is that sovereign states are only restricted in their ability to act towards each other by positive prohi­bi­tions under inter­na­tional law and are otherwise funda­men­tally free (the Lotus principle). The right question is therefore not what legal basis is suppos­edly required, but the other way round: is confis­ca­tion prohibited?

The idea that Russian state assets are sacro­sanct and untouch­able is absurd 

The idea that Russian state assets are sacro­sanct and untouch­able is quite absurd: after all, the West has frozen them for more than two years. Whether the principle of state immunity, which the Russian Central Bank assets enjoy, only protects against judicial and not legisla­tive acts, is judged differ­ently in inter­na­tional law. In any case, this principle does not apply absolutely, espe­cially with regard to a crime of aggres­sion. Leading inter­na­tional lawyers, including Christian J. Tams, who repre­sents Germany at the ICJ in the Nicaragua Case, have already explained in an expert opinion that confis­ca­tion in favour of Ukraine is very justi­fi­able as a permis­sible coun­ter­mea­sure under inter­na­tional law. In partic­ular, the inter­na­tional law experts show that the principle that coun­ter­mea­sures must be reversible does not apply absolutely. In any case, such a step would merely pay off existing debts, so that legally the Russian Feder­a­tion would not suffer any damage as a result. German consti­tu­tional law also does not preclude the confis­ca­tion of the Central Bank’s assets, partic­u­larly because the funda­mental rights of Germany’s Basic Law protect neither the Russian Central Bank nor the Russian state.

The owner is entitled to the benefits of a right in the same way as the property itself 

Actually there is much to suggest that the West has already more or less recog­nised the permis­si­bility of this measure: the European Union now at least wants to transfer the income generated by the frozen Russian state assets to Ukraine. However, according to general legal prin­ci­ples, the owner is entitled to the benefits of a right in the same way as the property itself (Omnis fructus non iure seminis, sed iure soli percip­itur, D. 22,1,25 pr.; see today, for example, § 953 BGB). Anyone who believes that it is permis­sible under inter­na­tional law to withdraw the proceeds of Russia’s assets and transfer them to Ukraine must explain why the same cannot be done with the assets them­selves. Prepa­ra­tions for this are most advanced in the United States: at the end of April, Congress not only approved aid for Ukraine totalling around 60 billion US dollars, but also created a mechanism that allows the President to confis­cate Russian currency reserves held in the US and allocate them to a Ukraine fund, whose money is to be used for reconstruction.

This gives the impres­sion that the legal arguments are merely a pretext and that the German government’s real concerns are centred on the economic conse­quences and Russia’s possible reactions. In partic­ular, it is feared that other countries will withdraw their reserves from Western currency areas for fear of further confis­ca­tion. However, the former head of the World Bank, Robert B. Zoellick, has long warned against over­es­ti­mating this risk. This is because non-Western curren­cies such as the Chinese yuan are not nearly as attrac­tive: a lack of convert­ibility and state inter­ven­tion make them unsuit­able as a currency reserve. Moreover, if the West acts together, there is no need to fear capital flight between the various Western currency areas.

What remains is the fear of a possible Russian reaction: this raises the funda­mental question of the extent to which this can be allowed to guide action if the Kremlin is not to be left in charge all the time. There are no Western currency reserves in Russia, so that the regime there could at best help itself to private Western companies — which would be illegal for a variety of reasons according to any reason­able opinion. Moreover, the Kremlin is already expro­pri­ating Western companies on a large scale.

If the frozen money would be given back to Russia, any hope of making the Kremlin liable for its crime of aggres­sion would be lost 

Finally, it is more than doubtful that the frozen assets could be used as leverage to bring Russia to the nego­ti­ating table. Russian currency reserves have already been frozen for two years without Russia showing any serious will­ing­ness to negotiate. If the frozen money would be given back to Russia, any hope of making the Kremlin liable for its crime of aggres­sion would be lost. That would be a fatal signal. After all, a rules-based order demands the opposite: War must not pay off for the aggressor.

The current debate focuses on the idea of making around 50 billion dollars available to Ukraine in a timely manner and securing a corre­sponding loan via the future income from the assets frozen in Belgium. Whatever the solution looks like: Creativity and legit­i­macy are required. Germany should stop standing on the brakes and contribute its own ideas to the debate.


Patrick Heinemann is a lawyer special­ising in admin­is­tra­tive law and a partner at the law firm Bender Harrer Krevet in Freiburg, Germany. His award-winning doctoral thesis on the legal history of the German Reich­swehr was published as a book in 2017. Patrick is a reserve officer in the Bundeswehr and a member of the German Federal Bar’s consti­tu­tional committee. He is a regular contrib­utor to and Legal Tribune Online ( and tweets at @P_O_Heinemann.




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