Dear Leaders of G7,

 

We are writing to you to call for decisive measures to enable the use of the immobilised Russian state assets for the reconstruction and continued war defence efforts of Ukraine. Global cooperation and aligned efforts of your countries are crucial to supporting Ukraine and its people in the unjust war of aggression and making Russia bear the responsibility for its wrongful acts. We urge you to use the meeting in Italy, to support the confiscation of the profits from the frozen Russian assets, as well as the entire body of assets.

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On 24 April 2024, U.S. President Joe Biden signed the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act, allowing the administration to seize the Russian state assets located in the U.S. In Canada, Bill S-278, currently under review in the Parliament, sets out a possible legal pathway to seize state assets by executive action.[1] On 21 May 2024, the EU Council adopted a set of legal acts enabling the use of net profits stemming from unexpected and extraordinary revenues accruing to Central Securities Depositories (CSDs) of Russian sovereign assets and reserves in the EU for military support and reconstruction of Ukraine. It is therefore time for the G7 countries to fully align their efforts and demonstrate a decisive and united approach in responding to Russia’s breach of international law and peace. G7 decisions on Russian state asset confiscation are crucial to support Ukraine in this moment of need, put an end to the war and, by this, decide the future not only of Ukraine but the whole of Europe. Decisions on the frozen assets are also of utmost importance to reduce as much as possible the toll of human lives which Ukraine is paying every single day in this unjustified war of aggression.

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The United Nations Human Rights Monitoring Mission in Ukraine (HRMMU) reported on  21 November 2023 that at least 10,000 civilians, including more than 560 children, have been killed and over 18,500 have already been injured since the launch of the full-scale armed attack against Ukraine by Russia. It is worth pointing out that this is data provided by official statistics, while actual figures might be much higher, especially when assessing the death rate in temporarily occupied territories. In Mariupol alone, preliminary estimates suggest up to 22,000 have died. A significant number of civilian casualties occurred far beyond the frontlines, caused by the Russian armed forces’ deployment of long-range missiles and loitering munitions against targets in populated areas across the country. Lately, Kharkiv, the second biggest city in Ukraine, has not seen a single day without being subjected to heavy missile strikes from Russia. On 25 May, Russian Forces hit the hypermarket "Epicentr" in Kharkiv with aerial bombs. The elimination of the fire lasted more than 16 hours. As a result of the attack, 19 people died and 53 were injured. The situation becomes even more sullen as Russia reportedly prepares the second phase of its offensive on Kharkiv. Russian aggression brings thousands of deaths, severe physical injuries, mental trauma, and destruction of Ukrainian heritage, environment, infrastructure and economy. The overall sum of reparations due to Ukraine and its people because of the Russian aggression was estimated at US$411 billion by the World Bank, as of 24 February 2023.

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Furthermore, as stated by a senior United Nations official in Security Council Meeting SC/15695 of 14 May 2024, Moscow’s intensified attacks on Ukraine’s civilian infrastructure caused extensive damage to energy facilities, compromised water supply in many areas and disrupted electricity access for millions of civilians. This is making the delivery of humanitarian assistance even more dangerous, and the power cuts are leaving millions of households across the country with no electricity, water or gas needed for cooking, heating and hygiene.

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G7 leaders should recognise that the current measures to end the Russian war of aggression are insufficient.

 

This not only puts a strain on the budgets of the partners supporting Ukraine and shifts the burden to their taxpayers but, most crucially, risks the war expanding beyond the borders of Ukraine. In fact, before the start of the invasion of Ukraine by Russia and while Russian troops were being amassed and military drills were executed near the Ukraine border in February 2022, Putin claimed the Russian “military exercises were purely defensive and are not a threat to any other country.” The current situation, where Putin strongly denies any intention to attack other countries in Eastern Europe bears worrying similarities with the context in which the Russian invasion of Ukraine started. Potential justifications to start a wider-scale attack in different East European countries such as Latvia, Lithuania, Moldova, Georgia, Kazakhstan, Azerbaijan and Turkmenistan - are already present for Russia. Furthermore, the war in Ukraine is being increasingly contextualised by Kremlin officials, particularly Putin, as “part of a long-term geopolitical confrontation between Russia and the West to justify Russia’s long-term war effort in Ukraine and future Russian aggression against other European countries. ”Estonia’s Foreign Intelligence Service already laid out the evidence showing that Russia is gearing up for a potential armed conflict with Western countries within the next decade by significantly growing its army and military production and creating the Leningrad and Moscow military districts at the border with Finland.

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We emphasise that there is a strong legal case for coordinated measures to seize Russian sovereign assets and transfer them to Ukraine, which has been laid out in numerous legal opinions.[2]

 

In its resolution from 2 March 2022, the United Nations General Assembly (UNGA) stated that by its act of aggression against Ukraine, Russia has acted in violation of its international obligations, including those arising from the United Nations (UN) Charter, in particular Article 2(4). The Articles on State Responsibility for Internationally Wrongful Acts (ARSIWA) of the UN International Law Commission (ILC) provide that “the responsible state is under an obligation to make full reparation for the injury caused by the internationally wrongful act”. Such “reparation must, as far as possible, wipe out all the consequences of the illegal act and re-establish the situation which would, in all probability, have existed if that act had not been committed”, and includes reparation for both material and moral damage. Furthermore, this obligation to provide reparation can be invoked by any state under international law. For this reason, the UNGA has recognised that Russia “must bear the legal consequences of all of its internationally wrongful acts, including making reparation for the injury, including any damage, caused by such acts”.

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Concerns should be addressed, which have been holding individual jurisdictions back from taking unilateral actions on asset confiscation despite the strong legal case for it being in place.  

 

First, contrary to the concerns about the reserve status of the Euro and US Dollar and stability of the global financial system in case of confiscation, the IMF data has shown that the governments keeping their reserves in Euro and US Dollar did not react to the measures taken concerning the Russian sovereign assets by pulling out their reserves - neither when the Russian assets were immobilised, during the first days of the Russian invasion, nor when the G7 announced that accounts will not be unblocked until Russia compensates Ukraine for its destruction. Therefore, fears that the governments holding national reserves in Euro and US Dollar will pull them out in case of Russian asset confiscation, appear unjustified.

 

International law provides at least two legal ways for confiscation to address the concerns over the legality of the seizure of russian state assets. Article 22, ARSIWA by the ILC, states that a countermeasure can be taken in response to an internationally wrongful act by a foreign state. Article 51 of the UN Charter certifies that states have an ‘inherent right of individual or collective self-defence if an armed attack occurs against a Member of the United Nations’.

 

Further, it should be noted that the currently immobilised Russian sovereign reserves represent accumulated surpluses from the past so that using them as reparation payments to Ukraine would not represent any future strain on the Russian economy and would not risk a situation similar to the one faced by Germany after the First World War.

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Finally, the Russian threat to impose reciprocal measures on Western companies still operating in Russia is valid universally and does not relate to the measures on Russian asset confiscation. The total absence of the rule of law and the continuous rise of authoritarianism and kleptocracy in Russia makes foreign companies vulnerable to expropriation anyway, as they have been facing this risk since the start of the full-scale war.

 

Last but not least, using russian assets allows G7 countries to minimize the financial load on their taxpayers when mobilizing the resources for aid to Ukraine. Russia is the most rightful actor to bear the burden of financing it.

 

We urge you, the G7 leaders, to adopt the decisive and necessary measures to confiscate Russian state assets as a means to force Russia to stop the killings and the humanitarian tragedies which its unjustified aggression is causing in Ukraine, to avoid the humanitarian crisis and the war spreading to other countries. Using Russian state assets as compensation for the damages caused to the Ukrainian people and its economy is the only currently viable way to restore international justice.

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Thank you for your consideration. We count on your support and decisive action.

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Kind regards,

 

NGO Promote Ukraine (Brussels, Belgium)

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Michael McFaul, Director, Freeman Spogli Institute for International Studies, Stanford University (Stanford, California, USA)

 

James Nixey, Director, Russia and Eurasia Programme, Chatham House (London, UK)

 

Evelyn N. Farkas, Executive Director, McCain Institute at Arizona State University (Washington, D.C., USA)

 

Steven Pifer, former US Ambassador to Ukraine (USA)

 

Francis Fukuyama, Senior Fellow, Stanford Center on Democracy, Development and the Rule of Law (Stanford, California, USA)

 

Nicolas Zharov, President, LUkraine (Luxembourg)

 

Anna Vdovychenko Program director, NGO PR Army (Kyiv, Ukraine)

 

Erik Jensen, Director, Rule of Law Program, Stanford Law School (Stanford, California, USA)

 

Edward Mayor, Président, Stand With Ukraine (Paris, France)

 

NGO Vitsche e.V. (Berlin, Germany)

 

Tom Keatinge, Director, Centre for Finance & Security at RUSI (London, UK)

 

Oksana Ihnatenko, Managing Director, Center for Financial Integrity at RUSI (London, UK)

 

Dr Kinga Redlowska, Head of CFS at RUSI Europe, Chair of the Advisory Board, Center for Financial Integrity in Ukraine (London, UK)

 

Myroslava Keryk, President of the Board, Ukrainian House Foundation (Poland)

 

Tatyana Deryugina, Associate Professor of Finance, University of Illinois (Illinois, USA)

 

Stan Veuger, Senior Fellow, American Enterprise Institute for Public Policy Research (Washington, D.C., USA)

 

Yuriy Gorodnichenko, Quantedge Presidential Professor of Economics, University of California - Berkeley (Berkley, California, USA)

 

Daniel Schaefer, Assistant Professor of Economics, Johannes Kepler University Linz (Linz, Austria)

 

Tatiana Fedyk, Associate Professor, University of San Francisco (San Francisco, California, USA)

 

Raj M. Desai, Professor, Georgetown University (Washington, DC, USA)

 

Dora Costa, Professor of Economics, University of California (Los Angeles, California, USA)

 

Michael Alexeev, Professor of Economics, Indiana University (Bloomington, Indiana, USA)

 

Jurek Konieczny, Professor of Economics, Wilfrid Laurier University (Waterloo, Ontario, Canada)

 

Steve Cicala, Associate Professor of Economics, Tufts University and NBER (Massachusett, USA)

 

Anastassia Fedyk, Assistant Professor of Finance, University of California, Haas School of Business, and co-founder of Economists for Ukraine (Berkeley, California, USA)

 

James Hodson, CEO, AI for Good Foundation, and co-founder of Economists for Ukraine (California, USA)

 

Ilona Sologoub, VoxUkraine scientific editor (Kyiv, Ukraine)

 

Hanno Lustig, Mizuho Financial Group Professor of Finance, Stanford (Stanford, California, USA)

 

Robert Eberhart, Associate Professor of Management, University of San Diego (San Diego, California, USA)

 

François Joinneau, founder of Tuvalu 51/Seaquatoria

 

Fabio Ghironi, Paul F. Glaser Professor of Economics, University of Washington (Washington, D.C., USA)

 

d’Artis Kancs, Senior Economist, European Commission Mats Marcusson, retired European Commission official Wojciech Kopczuk, Professor of Economics and of International and Public Affairs, Columbia University (Columbia, USA)

 

Valeria Fedyk, Finance PhD, London Business School (London, UK)

 

George Loginov, Associate Teaching Professor of Economics, Augustana University (Sioux Falls, South Dakota, USA)

 

Serhii Bolhov, Head of U8 Ukrainian Analytical Center NGO (Kyiv, Ukraine)

 

Oleh Savytskyi, Strategic Advisor, NGO Razom We Stand (Kyiv, Ukraine)

 

NPO Stand with Ukraine Japan (Tokyo, Japan)

 

Oles Horodetskyy, President of Associazione cristiana degli ucraini in Italia (Rome, Italy)

 

Mary Pieterse-Bloem, Professor Financial Markets, Erasmus University (Rotterdam, Netherlands)

 

Dmitriy Sergeyev, Associate Professor, Bocconi University (Milan, Italy)

 

Viktoriia Lapa, Lecturer, Bocconi University (Milan, Italy)

 

Bohdan Kukharskyy (City University of New York)

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1. https://ukraine.un.org/en/253322-civilian-deaths-ukraine-war-top-10000-un-says

2. https://www.iiss.org/en/research-paper/2024/05/on-proposed-countermeasures-against-russia-to-compensate-injured-states-for-losses-caused-by-russias-war-of-aggression-against-ukraine/

https://www.europarl.europa.eu/RegData/etudes/STUD/2024/759602/EPRS_STU(2024)759602_EN.pdf

https://united4ukraine.network/wp-content/uploads/2023/12/legal-memo-on-countermeasures.pdf

https://ukrainianvictory.org/publications/research-confiscation-of-russian-sovereign-assets-perspectives-of-adjudication-in-the-international-courts/