Editor’s note: This article is part of Just Security’s series on reparation mechanisms in the context of Russia’s war against Ukraine.

Two years into Russia’s full-scale invasion of Ukraine, experts estimate that it will cost nearly half a trillion dollars to rebuild the country. That figure does not include the ongoing cost of Ukraine’s defense, let alone the tremendous moral damages suffered during the war. Shortly after the invasion, Western countries froze roughly $300 billion in Russian foreign-currency reserves held in their central banks. Talk quickly turned to the possibility of seizing—rather than just freezing—those assets, as well as other assets belonging to Russia and to Russian oligarchs. While some officials were immediately enthusiastic about the idea of seizing Russian central bank assets, others expressed grave concern about the legal and policy implications of doing so.

Those legal and policy concerns have not changed. What have shifted are some countries’ domestic legal landscapes, as well as their political will to push the legal envelope and downplay the policy risks of seizing Russian State assets as the war drags on and becomes ever-more costly. The sums that may be made available to Ukraine as a result of these shifts are sizeable, although they still fall far short of satisfying Ukraine’s overall needs and Russia’s obligations.

Unilateral Domestic Measures

Ukraine has been at the forefront of wartime seizures of Russian assets. Ukraine has administratively seized assets of at least two Russian banks, in addition to various other Russian State assets. The Ukrainian Supreme Court has held that Russia does not enjoy sovereign immunity from suit for war-related damages. That said, Ukraine does not hold sufficient Russian assets against which to enforce current and eventual Ukrainian judgments against Russia. Moreover, other countries’ courts are not likely to recognize and enforce Ukrainian judgments against Russia absent broader acceptance of an exception to sovereign immunity for war-related acts. To date, the International Court of Justice has viewed acts of armed forces committed during armed conflict as acta jure imperii (sovereign acts) presumptively shielded by State immunity from foreign jurisdiction, rather than acta jure gestionis (commercial acts) subject to adjudication in foreign courts. Even if a judgment were rendered against a foreign State for such acts, enforcing a judgment against that State’s central bank assets would violate established principles of immunity from execution. This is why proposed justifications for seizing Russian State assets in general, and its central bank assets in particular, have focused on potential “circumstances precluding wrongfulness” or defenses for what would otherwise be an internationally unlawful act.

Other countries do not appear to have followed Ukraine’s lead in finding an exception to sovereign immunity for Russian aggression in their domestic courts. They have, however, developed creative legal frameworks for seizing Russian oligarch assets that come within their territorial jurisdiction. Canada, which has the world’s largest Ukrainian population outside of Russia and Ukraine, has enacted forward-leaning amendments to its Special Economic Measures Act (SEMA) to allow seizure and forfeiture of Russian-owned property. This seizure authority does not displace the protections of Canada’s State Immunity Act (SIA), meaning that the measures have targeted nominally private, rather than overtly State-owned, property, including assets owned by Russian oligarch Roman Abramovich. Canada has also been pursuing the line of argument that sovereign immunity protections only constrain judicial, not executive, measures. Another proposed bill would strengthen Canada’s role as a norm entrepreneur in this area by allowing for seizure of foreign State assets by way of executive action. According to the bill’s sponsor, Senator Ratna Omidvar, “Because Canada likely only has a small amount of Russian State assets, [it] also [has] a unique opportunity to reach for a low-risk yet high-impact opportunity to set the pace so that others follow.” Meanwhile, Canada’s Finance Minister Chrystia Freeland has urged other countries to “go further” in taking measures to ensure that “the aggressor pay[s]” for the damage in Ukraine.

In the United States, the Senate Foreign Relations Committee has passed the Rebuilding Economic Prosperity and Opportunity (REPO) for Ukrainians Act, which is an important step in moving the law toward adoption by the full Congress. This legislation would give the president authority to confiscate frozen Russian sovereign assets and transfer them to Ukraine via a Ukraine Support Fund administered by the State Department and USAID. Supporters of the bill argue that it is consistent with international law. Among other provisions, the Act prohibits the release of frozen Russian sovereign assets until Russia ceases its hostilities and fully compensates Ukraine. This measure seem unlikely to generate significant controversy, since asset freezes have generally been viewed as a legitimate foreign policy tool (notwithstanding the argument that immobilizing sovereign assets, and especially central bank assets, is inconsistent with principles of sovereign immunity and/or inviolability). However, the Act also vests unreviewable discretion in the executive branch to distribute the confiscated funds. This arguably opens the door to using the funds to underwrite Ukraine’s war effort, rather than to support its reconstruction. This, in turn, could give Russia and other countries outside the core bloc of Ukraine’s Western allies even greater reason to criticize the seizure as internationally unlawful.

Some critics of the REPO Act would prefer to see confiscated assets turned over to an international body that would be insulated both from Russian demands, and from the reach of other judgment creditors (or “line-jumpers”). From their perspective, if the conflict ends with a negotiated settlement and not a decisive defeat of Russian forces, then “the credibility and power of the international body in control of the confiscated Russian sovereign assets becomes critical.” Although a Register of Damage has been created to collect and document claims, the question of how to fund eventual claims payments remains largely unanswered. Unilateral acts to seize Russian State assets remain vulnerable to criticisms that they violate core principles of state sovereignty and/or inviolability that should not lightly be cast aside. It would be hard to “unring” the bell of unilateral (and largely self-judging) exceptions to the protections traditionally afforded one State’s sovereign held by, or on the territory of, another State.

The Evolving European Approach

Europe, for its part, has by and large resisted calls to seize Russian central bank assets outright. Some proposals would allow frozen Russian assets to be treated as collateral for zero-interest loans that could be used to fund Ukrainian reconstruction. In addition, the European Union has passed a law requiring central bank depositaries that hold more than one million euros of Russian central bank assets to account separately for the profits generated from those assets. These depositaries are also prohibited from disposing of the net profits. Euroclear, which holds the majority of frozen Russian assets in the EU, has indicated that such profits exceed 4 billion euros annually. This represents a step towards implementing a “windfall tax” on these profits, the proceeds of which could be used in favor of Ukraine. Although there is no obvious distinction to be made between a State’s ownership interest in the principal of an investment and the interest earned on that principal, the idea of a windfall tax is not unprecedented. Moreover, although sovereign wealth funds (one form of foreign governmental investment) have generally been deemed exempt from domestic taxation, it is not clear that established principles of foreign sovereign immunity require such differential treatment.

European decision-makers appear to view the seizure of “windfall profits” as less legally and politically risky than seizure of the principal. The United States has reportedly “been able to develop a legal theory for how Russia could be held accountable [that some] think will be held up internationally in the courts and will be widely recognized as legitimate,” including under a theory of countermeasures taken by “specially affected states.” Given the amount of attention that has been devoted to analyzing various avenues for providing reparations absent Russian defeat or voluntary agreement, it seems unlikely that any radically new legal theories have surfaced. Rather, what seems to have changed is countries’ political willingness to tolerate the potential legal and policy risks involved in various proposals, in light of the staggering disparity between Ukraine’s needs and otherwise available financial support.

International Legal Implications

Policy developments over the past two years have been facilitated by sustained dialogue among Ukraine’s allies about how to continue providing financial support for Ukraine’s self-defense and to ensure the availability of funds to rebuild Ukraine, without irreparably destabilizing Russia. The importance of genuine multilateralism (rather than simply coordinated unilateralism) cannot be overstated. That said, it is critical to remember that the multilateralism we are seeing is taking place among a select group of States, and not the “international community” as a whole. The perceptions and reactions of non-Western countries remains critical to the legitimacy of any measures taken to support Ukraine’s reconstruction, and to the long-term sustainability of any peaceful settlement of the ongoing conflict.

It is also possible that pressures to seize Russian State assets will culminate in a “Grotian moment,” in which “Russia’s violations of international law may in of itself [sic] justify the development of rules and doctrines of customary international law that allow for the repurposing of the full range of frozen Russian assets, including those owned by the State.” International lawyers often emphasize that the international legal system is built on reciprocity—an observation that may earn them the reputation of naysayers, but that cannot be ignored. If current circumstances warrant revisiting the basic assumption that certain foreign State assets are “off limits,” and if decision-makers are confident that no future international decision or settlement will compel them to repay seized assets—then they should proceed along the current, incremental path. It would be a shame, however, if the emphasis on developing mechanisms for seizing Russian assets detracted from continued efforts to persuade domestic electorates that contributing to Ukraine’s self-defense and facilitating an eventual peaceful settlement is both a moral and geopolitical imperative.

IMAGE: Ukrainian workers close to completing rebuilding a bridge over the Siverskyi Donets River that was destroyed by Ukrainian forces to slow an advance by Russian troops during Moscows all-out spring 2022 invasion of Ukraine, on February 16, 2024 in Sviatohirsk, Ukraine. The nearby 16th-century Orthodox Monastery of the Caves was damaged during three months of Russian occupation, along with large portions of the town. (Photo by Scott Peterson/Getty Images)