(Bloomberg) -- A group of legal experts sought to bolster the case for seizing frozen Russian central bank assets, arguing that such actions are allowed under international law given the scale of Russia’s continuing attacks in Ukraine.

The European Union, the Group of Seven nations and Australia have frozen about €260 billion ($280 billion) in the form of securities and cash, with more than two-thirds of that immobilized in the EU. They all agree that those funds should remain off-limits from Russia unless it agrees to help with Ukraine’s reconstruction, but so far they’re at odds over the legality of seizing the assets outright. 

The letter, which was circulated to G-7 capitals and obtained by Bloomberg News, is co-signed by ten international law experts and practitioners from Belgium, France, Germany, Japan, the Netherlands, the UK, and the US who seek to make the legal case for seizing the assets in question.

“We have concluded that it would be lawful, under international law, for States which have frozen Russian State assets to take additional countermeasures against Russia, given its ongoing breach of the most fundamental rules of international law, in the form of transfers of Russian State assets as compensation for the damage that has resulted directly from Russia’s unlawful conduct,” the experts wrote. 

As Russia’s invasion of Ukraine grinds on, the assessment reflects a broader willingness to consider what once was viewed as a legally questionable move to seize the frozen assets.

Among those who signed the letter are Harold Hongju Koh, a Yale Law School professor and former dean, who also was a US State Department legal adviser under the Obama administration, and the Hoover Institution’s Philip Zelikow, an attorney and former career diplomat who worked in government across presidencies, including as a strategic consultant for the Biden administration. Seven of the remaining signatories are international law academics and practitioners from Europe and one is from Japan.

While the analysis was solicited by interested governments, including some in the G-7, the authors wrote that “none of us are acting on behalf of sponsors or clients.” The letter disclosed that Koh does represent Ukraine before certain international tribunals.

The letter comes as G-7 nations are debating what to do with the assets in question as Ukraine’s financing needs remain persistently high, with the war showing no signs of abating. The EU is slowly making progress on plans to at least apply a windfall tax to the profits generated by the immobilized funds. Last year the funds enabled profits of €4.4 billion.

The UK and the US have been pushing G-7 allies to seize the central bank assets outright, with Canada open to the idea, according to officials familiar with the discussions. The group’s European members, especially France and Germany, are currently opposed to the move over legal concerns and worries that it could damage the stability of the euro as well as set a dangerous precedent, the officials said. 

Lawful countermeasures, the legal scholars say, are those that would be unlawful if imposed against an innocent state that hasn’t violated its international obligations. Such moves are permitted, they argue, if they are taken against an offending state and are intended to persuade it to cease its unlawful conduct and comply with its obligation to compensate those injured, or, if persuasion fails, to achieve that compensation with the offending state’s assets.

Legal Concerns

Discussions over utilizing the Russian assets have intensified with the war heading into its third year. As Republicans in Washington continue to block new aid for Kyiv, the Biden administration is keen to offer Ukraine another important signal of its support.

The position of EU member states is crucial as the vast majority of the funds are in Europe, mostly at the Belgium-based clearing house Euroclear. The clearing house and the European Central Bank are both skeptical of the right to seize the assets. 

Still, G-7 nations are discussing options. Among the ideas under discussion is using the funds as collateral to raise debt or as guarantees for loans. 

If a solution can be found that overcomes the current concerns, the aim would be to announce a plan when G-7 leaders meet in Italy in June. 

In their letter, the legal experts recommend the states that have frozen these assets transfer them to an international mechanism under their jurisdiction, which could then allocate escrowed assets to support programs to mitigate damages and aid Ukraine’s recovery. 

Estonia’s Prime Minister Kaja Kallas told Bloomberg in an interview on the margins of the Munich Security Conference on Sunday that as an “exit strategy” allies should look at the register of war crimes and damages Russia has caused Ukraine that are being calculated in the Hague and seize an equivalent value.


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