{"id":62955,"date":"2024-05-09T14:16:20","date_gmt":"2024-05-09T12:16:20","guid":{"rendered":"https:\/\/libmod.de\/?p=62955"},"modified":"2024-06-19T22:16:58","modified_gmt":"2024-06-19T20:16:58","slug":"russia-sanctions-dossier-central-bank-asset-seizure-heinemann","status":"publish","type":"post","link":"https:\/\/libmod.de\/en\/russia-sanctions-dossier-central-bank-asset-seizure-heinemann\/","title":{"rendered":"Seizing Russian Assets: Too Little, But Not Too Late"},"content":{"rendered":"

[vc_row][vc_column][vc_column_text]<\/p>\n

<\/p>\n

[\/vc_column_text][\/vc_column][\/vc_row][vc_row css=\u201d.vc_custom_1508251598805{margin-top: 30px !important;}\u201d][vc_column width=\u201c2\/3\u201d css=\u201d.vc_custom_1508252250311{padding-right: 20px !important;}\u201d][vc_column_text css=\u201c\u201d]<\/p>\n

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 reser\u00adva\u00adtions. Patrick Heinemann<\/em> explains, why the money can and should be used swiftly.<\/h3>\n

[\/vc_column_text][vc_message css=\u201c\u201d]This article is a contri\u00adbution to a dossier on sanctions<\/a> that the Center of Liberal Modernity publishes in the run-up to its annual conference Russia and the West<\/em><\/a> on 15 May.<\/p>\n

A German version has been published on Russland verstehen<\/a><\/em><\/p>\n

[\/vc_message][vc_column_text css=\u201c\u201d]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 impos\u00adsible. However, they rarely take their own initia\u00adtives. 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\u2019s share, around 200 billion, is held by the \u2018Euroclear\u2019 clearing house in Belgium. <\/p>

\"Patrick<\/p>

Patrick Heinemann<\/a> is a lawyer specialised in admin\u00adis\u00adtrative law and a partner in the law firm Bender Harrer Krevet in Freiburg im Breisgau. <\/p><\/div>\n

There is no evidence that Russia will pay reperations<\/h2>\n

According to the principles of state respon\u00adsi\u00adbility under inter\u00adna\u00adtional law, the Russian Feder\u00adation already owes Ukraine repara\u00adtions 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\u2019s claim to repara\u00adtions already exists irrespective of any special regula\u00adtions on this in a later peace treaty with the Russian Federation.<\/p>\n

Currently there is no evidence for this at all: Russia is waging war with the aim of eradi\u00adcating Ukraine as a subject of inter\u00adna\u00adtional law. The Kremlin is currently moving closer to this goal again because the West\u2019s support for Ukraine\u2019s 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 author\u00adi\u00adta\u00adtively regulated repara\u00adtions by Iraq for Kuwait in the early 1990s, is no option because of Russia\u2019s veto.<\/p>\n

As is so often the case, inter\u00adna\u00adtional law is therefore dependent on decen\u00adtralised 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.<\/p>\n

The legal reser\u00adva\u00adtions raised against the confis\u00adcation of Russian central bank assets are ultimately not convincing. We keep hearing<\/a> 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 confis\u00adcation of Russian Central Bank assets should be illegal, but simply presup\u00adposes this. The starting point is that sovereign states are only restricted in their ability to act towards each other by positive prohi\u00adbi\u00adtions under inter\u00adna\u00adtional law and are otherwise funda\u00admen\u00adtally free (the Lotus principle<\/em><\/a>). The right question is therefore not what legal basis is supposedly required, but the other way round: is confis\u00adcation prohibited?<\/p>\n

The idea that Russian state assets are sacro\u00adsanct and untouchable is absurd<\/p><\/blockquote>\n

The idea that Russian state assets are sacro\u00adsanct 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 differ\u00adently in inter\u00adna\u00adtional law. In any case, this principle does not apply absolutely, especially with regard to a crime of aggression. Leading inter\u00adna\u00adtional lawyers, including Christian J. Tams, who repre\u00adsents Germany at the ICJ in the Nicaragua Case, have already explained in an expert opinion<\/a> that confis\u00adcation in favour of Ukraine is very justi\u00adfiable as a permis\u00adsible counter\u00admeasure under inter\u00adna\u00adtional law. In particular, the inter\u00adna\u00adtional law experts show that the principle that counter\u00admea\u00adsures must be reversible does not apply absolutely. In any case, such a step would merely pay off existing debts, so that legally the Russian Feder\u00adation would not suffer any damage as a result. German consti\u00adtu\u00adtional law also does not preclude the confis\u00adcation of the Central Bank\u2019s assets<\/a>, partic\u00adu\u00adlarly because the funda\u00admental rights of Germany\u2019s Basic Law protect neither the Russian Central Bank nor the Russian state.<\/p>\n

The owner is entitled to the benefits of a right in the same way as the property itself<\/p><\/blockquote>\n

Actually there is much to suggest that the West has already more or less recog\u00adnised the permis\u00adsi\u00adbility of this measure: the European Union now at least wants to transfer the income generated by the frozen Russian state assets to Ukraine<\/a>. 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, \u00a7 953 BGB). Anyone who believes that it is permis\u00adsible under inter\u00adna\u00adtional law to withdraw the proceeds of Russia\u2019s assets and transfer them to Ukraine must explain why the same cannot be done with the assets themselves. Prepa\u00adra\u00adtions 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.<\/p>\n

This gives the impression that the legal arguments are merely a pretext and that the German govern\u00adment\u2019s real concerns are centred on the economic conse\u00adquences and Russia\u2019s possible reactions. In particular, it is feared that other countries will withdraw their reserves from Western currency areas for fear of further confis\u00adcation. However, the former head of the World Bank, Robert B. Zoellick, has long warned against overes\u00adti\u00admating this risk<\/a>. This is because non-Western currencies such as the Chinese yuan are not nearly as attractive: a lack of convert\u00adibility and state inter\u00advention 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.<\/p>\n

What remains is the fear of a possible Russian reaction: this raises the funda\u00admental 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 \u2014 which would be illegal for a variety of reasons according to any reasonable opinion. Moreover, the Kremlin is already expro\u00adpri\u00adating Western companies on a large scale.<\/p>\n

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<\/p><\/blockquote>\n

Finally, it is more than doubtful that the frozen assets could be used as leverage to bring Russia to the negoti\u00adating 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.<\/p>\n

The current debate focuses on the idea of making around 50 billion dollars available to Ukraine<\/a> in a timely manner and securing a corre\u00adsponding loan via the future income from the assets frozen in Belgium. Whatever the solution looks like: Creativity and legit\u00adimacy are required. Germany should stop standing on the brakes and contribute its own ideas to the debate.<\/p>\n

 <\/p>\n

\n

Patrick Heinemann<\/strong> is a lawyer special\u00adising in admin\u00adis\u00adtrative 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 Reich\u00adswehr was published as a book in 2017. Patrick is a reserve officer in the Bundeswehr and a member of the German Federal Bar\u2019s consti\u00adtu\u00adtional committee. He is a regular contributor to Verfassungsblog.de and Legal Tribune Online (lto.de) and tweets at @P_O_Heinemann.<\/em><\/p>\n

 <\/em><\/p>\n

 <\/i><\/p>\n

\"Textende\"[\/vc_column_text][vc_separator][vc_column_text]Did you like this article? If yes, you can support the independent editorial work and journalism of LibMod via a simple donation tool.[\/vc_column_text][vc_column_text]