A growing chorus of voices suggests that the financial burden of supporting Ukraine in its war against Russia should not fall on the shoulders of Western taxpayers. Instead, they argue, the proceeds from the seized assets of Russian oligarchs and wealthy individuals should be used to finance the war effort. Using already seized funds and liquidation seized yachts and jets could bring in many billions and relieve taxpayers.
The Rationale Behind the Demand
The primary argument in favor of this approach is that many of these oligarchs have allegedly benefited from their close ties to the Russian government and, by extension, its aggressive policies. By seizing and liquidating their assets not only would it serve as a punitive measure against those who have supported or benefited from the war, but it would also provide a practical means to fund the war without additional strain on Western economies.
The official U.S. position is that Russia is a kleptocracy, and the oligarchs are the kleptocrats who stole the assets that have now been forfeited to the state or the people. Remaining in this mindset, the assets would be considered illegally acquired anyway and could be confiscated and exploited by the respective state.
The Feasibility of Selling Seized Assets
Pros:
- Economic Relief: Using the proceeds from the sale of seized assets would alleviate the financial burden on Western countries, ensuring that taxpayers are not solely responsible for funding the war.
- Deterrence: The threat of asset seizure and liquidation could act as a deterrent for other potential aggressors or supporters of aggressive policies.
- Justice: Many argue that those who have profited from or supported the war should bear its costs.
Cons:
- Legal Challenges: The process of seizing and selling assets could be mired in legal challenges, especially if the owners of these assets contest the seizures in international courts.
- Market Impact: Flooding the market with high-value assets in a short period could depress their values, leading to lower-than-expected proceeds.
- Logistical Issues: Identifying, seizing, managing, and selling a vast array of assets, ranging from real estate to shares in companies, could present significant logistical challenges.
Only Dictators Do It
There are also interesting dissenting voices who believe that the assets seized from the Russians should be used to finance Western support for Ukraine. For example, Gretta Fenner, the Managing Director of the Basel Institute on Governance and Director of its International Centre for Asset Recovery, told British journalist Mark Hollingsworth in an interview that such methods should only occur in dictatorships.
This is done by dictators not by democracies that adhere to the rule of law and international human rights. Financial support for Ukraine is vital and urgent. But if western governments undermine their own commitment to the rule of law to obtain that money, then they are violating the very principles that Ukraine is fighting to preserve.’
Gretta Fenner, Managing Director of the Basel Institute on Governance and Director of its International Centre for Asset Recovery
This opinion can be contrasted with the official U.S. position. It sees Russia as a kleptocracy and the oligarchs as kleptocrats. Therefore, in March 2022, the KleptoCapture Taskforce was established to track down and capture assets allegedly stolen by oligarchs worldwide. Legally, therefore, per the official statement of the U.S. Department of Justice, these assets are to be described as illegally acquired and can thus be liquidated.
However, Russian assets are already being sold off arbitrarily. A few weeks ago, the Caribbean Island of Antigua auctioned a 259-foot-long luxury super yacht called Alfa Nero, valued at $120 million. In March 2022, the Alfa Nero arrived and moored at Falmouth harbor in Antigua. It was owned by Flying Dutchman Overseas Ltd, a BVI company owned by the Tyne Trust, whose beneficiary is Yulia Guryeva-Motlokhov, the daughter of the Russian oligarch Andrey Guryev.
As reported by FinTelegram, the former Google CEO Eric Schmidt has bought the superyacht at auction. However, he then backed out because the Russian owners or their companies had brought lawsuits.
Preliminary Conclusion
While the idea of financing the Western support of the Ukraine war through the sale of seized assets is appealing from a moral and economic standpoint, its practical implementation could be fraught with challenges. Legal battles could delay the availability of funds, and there’s no guarantee that the sale of assets would generate the expected revenues. Moreover, such a move could have broader implications for international relations and the global economy.
It’s essential to weigh the immediate financial benefits against the long-term geopolitical and economic consequences. A more balanced approach, where a portion of the war effort is financed through seized assets while ensuring due legal processes and market stability, might be a more pragmatic solution.
In conclusion, while the sale of seized assets presents a potential avenue for financing the war, it’s crucial to approach the matter with caution, foresight, and a commitment to upholding international law and economic stability.
