Will Russia pay reparations after the end of the war in Ukraine?

Sooner or later, the war in Ukraine will end and Russia will have to pay for all the evil it has done. In one of our previous articles, we talked about the damage that Russia caused us during the year of the war. The total amount of direct and indirect damage caused by Russia to Ukraine is $423 bn. And as of December 19, 2022, 6,826 dead and 10,759 wounded civilians are known. These data are constantly updated, and the exact number of people affected by the war will be known only after its end.

The Executive Vice President of the European Commission, Valdis Dombrovskis, said on January 20, 2023, during a discussion at the World Economic Forum in Davos regarding the trajectory of future relations with Russia, that after the end of the Russian-Ukrainian war, the aggressor will have to pay reparations.

«The first thing we have to do in the longer term is to bring this war to an end and end it with the victory of Ukraine. The question arises — how will Russia be involved in this postwar world? Russia, as the aggressor, is obliged to pay reparations for Ukraine. Answers to questions about post-war relations (with the EU — ed.) will reflect the processes in Russia itself: whether they intend to continue aggressive imperialist policies and prepare new aggressive plans. Only Russia itself can answer this question, we cannot answer it».

War reparations — compensation payments made after a war by one side to the other. They are intended to cover damage or injury inflicted during a war.

 

How is the reparation collection procedure?

The most high-profile case of reparations from the aggressor country was the prosecution of Germany after the end of the Second World War. Then, in 1945, at the Yalta Conference, the forms of reparations from Germany and its allies to compensate for the damage caused during the war were determined.

There are known cases of recovery of reparations thanks to the creation of the International Claims Commission (ICC). Example: Iran-United States Claims Tribunal, United Nations Compensation Commission і Eritrea-Ethiopia Claims Commission.

According to Deputy Minister of Justice Iryna Mudra, Ukraine is also preparing to organize such a commission against Russia. In particular, on May 18, 2022, the President of Ukraine signed a decree on the creation of a working group that will deal with the development and implementation of international legal mechanisms for compensation for damage caused by Russia’s armed aggression.

On the same day, the School of Law of Columbia University announced the launch of the «International Lawsuits and Reparations» project, which should provide consultations to the Ukrainian authorities on the subject of international legal mechanisms for collecting reparations from Russia.

In his article, economic consultant Vadim Novikov wrote:

«A day after these organizational events, three of the members of the working group on the website of the European Journal of International Law published an article that can be considered conceptual. From all the international experience and judicial practice, even before the work group began, a choice was made in favor of one international legal mechanism — International Claims Commissions.»

He explained in detail how the ICC works and what risks it carries for Ukraine. Let’s briefly summarize: 

The International Claims Commissions provides for the withdrawal of Russian frozen assets by countries allied to Ukraine in our favor. In fact, the interested countries are creating a commission where they have the opportunity to consider a huge number of lawsuits arising as a result of the war and provide funds to every Ukrainian affected by Russia.

The first nuance that can become an obstacle to the implementation of this plan is the illegality of recovery of frozen Russian assets in favor of another country. This is a violation of international law, which the Russian Federation will be able to challenge in an international court.

The cases where the ICC has been effective (we cited them earlier) have worked on the condition that the state that had to pay admitted its guilt and agreed to it. The situation is completely different with Russia, which has already shown contempt for international norms by many of its actions. Also, it is worth mentioning that it has sovereign immunity and the right of veto — that is, it can trivially refuse to admit its guilt and the legitimacy of the creation of the ICC.

By the way, Vadim Novikov added that the Russians may even try to make their own commission with allied countries and demand that Ukraine pay reparations.

«Based on the logic of the creation of the ICC based on an agreement that is not recognized by the other side of the conflict, we can quite realistically imagine that Russia will also sign an international agreement on the ICC, which will demand reparations from Ukraine for the destruction of Mariupol, Volnovakha and other territory of the DPR and LPR. 

Russia can sign such an agreement with the DPR and LPR, which will look quite eccentric, or with UN members — Belarus, Eritrea, Syria, the DPRK (Democratic People’s Republic of Korea), which would look more decent. It is not excluded that China will also sign the agreement, if at that moment it is in particularly bad relations with the USA».

Instead, Novikov offers another option:

«If Ukraine concludes an agreement with the UN General Assembly on the creation of an international court to punish Russia for the crime of aggression and to collect compensation from it, then the immunity of Russia and its president will not be an obstacle for this court. Moreover, the legitimacy of a special UN international court will be higher than the legitimacy of any commission created by a treaty of several countries».

We managed to contact the associate partner of MK Legal Service, advisor of the direction of legal research of the Institute of Conflict Studies and Analysis of Russia (ICARUS), Oleksandr Boyaryntsev. He noted that the establishment of the ICC is a very good decision for Ukraine.

«Currently, a special international commission appears to be the most effective international method for compensating Ukraine for damages caused as a result of Russian aggression. In world experience, more than 400 such commissions were created, which performed the functions of considering claims as a result of crisis situations and military conflicts».

The General Assembly supported this idea by adopting a resolution with a recommendation that UN member states create an international register of damage caused to Ukraine. Such a register can be used to further form the evidence base and accuse Russia, and therefore collect funds from it in favor of Ukraine.

However, the participation in the creation of such a register and the further work of the commission of countries that are members of the UN, but do not support Ukraine, is in question. Therefore, Boyaryntsev sees the best solution to create such a commission based on an international agreement of countries that are members of groups of UN members and coalitions.

«Yes, the President of Ukraine Volodymyr Zelenskyy proposed that the partners create a special international commission and a separate fund on the basis of the country’s multilateral agreement. This fund should receive Russian money and assets seized by the signatory countries of the treaty. This proposal, in my opinion, needs to be supplemented with another source of financing — funds from the sale of Russian oil products.»

The most likely assets that can be recovered in favor of Ukraine, the expert considers:

1. Foreign exchange reserves of the Central Bank of Russia;

Bloomberg estimates that a total of about $350 billion of funds can be used as reparations.

2. Assets of citizens of the Russian Federation that have come under the sanctions of the USA, the EU and other countries;

According to the European Commission, $74 billion of Russian funds were under EU sanctions. The total potential of these sanctions is not disclosed, alone as of March 17, 2023, 1,473 individuals and 205 companies are already subject to EU sanctions.

In addition, Switzerland seized assets worth a total of about $28 billion. Great Britain went even further, imposing sanctions on 1,550 individuals and 180 companies.

3. Funds from the sale of Russian oil products.

To date, 32 countries, in particular the USA, G7, Australia and the EU, have set price ceilings for Russian crude oil and oil products through various regulatory documents. That is, oil in the Russian Federation cannot be bought more expensively than $60 per barrel. This, of course, harms the economy of the aggressor country, which in turn reduces the amount of funds that the Russian Federation can allocate for waging war.

There are two disadvantages: 1) such restrictions do not take into account possible price fluctuations for oil and oil products; 2) this «price ceiling» is of no benefit to Ukraine, which is suffering from Russian aggression.

 

More ways to collect reparations from Russia

Oleksandr Boyaryntsev talked about four  more ways to collect reparations from Russia

Including:

1. European Court of Human Rights;
2. International Criminal Court;
3. Permanent Chamber of the Arbitration Court in The Hague;
4. Other international arbitration courts;

All of them have their drawbacks. For example, the European Court of Human Rights (ECHR) is better suited to redress damages caused to specific people or companies. For the crime of aggression against the Russian Federation, on the contrary, it is worse suited, given two important factors:

• The ECHR may not recognize jurisdiction over damage caused during hostilities.

On March 15, 2022, the Committee of Ministers of the Council of Europe decided that Russia’s membership in the Council of Europe should be terminated. The ECHR has jurisdiction only over countries that are members of the Council of Europe. Therefore, this decision terminated the jurisdiction of the ECHR in cases involving Russia.

• Russia refused to recognize the jurisdiction of the ECHR.

The International Criminal Court can be considered as an alternative method for targeted compensation for minor damages. In order for the ICC to make a decision on the payment of funds for the benefit of the victims, one of two conditions must be met:

• these funds are taken only on the basis of the sale of property and from the funds of persons recognized by the ICC as guilty of crimes committed, in accordance with the Rome Statute;
• these funds are taken from a special trust fund for victims.

The downside is that the criminal’s assets will not be enough to cover all the damage caused to the Russian Federation.

International arbitration courts

This mechanism can be used by foreign investors who invested in Ukraine, but their assets were seized, damaged or destroyed as a result of Russian aggression, and ended up in the territory of annexed and temporarily occupied regions.

Investors who were forced out of the Russian Federation due to military sanctions can also go to international arbitration. In general, this method will help mainly investors.

The Permanent Chamber of Arbitration in The Hague would be suitable for individual companies, but due to the long processing time, claimants may take years to receive the necessary funds.

The relevant investment protection agreement is still concluded between Ukraine and the Russian Federation.

It was this contract that enabled “Naftogaz” of Ukraine to file a claim with the Permanent Chamber of the Arbitration Court in The Hague for compensation for damages caused during the annexation of Crimea in 2014, in the amount of more than 10 billion dollars. So, Russia appropriated ships, fields, drilling rigs and other assets belonging to “Naftogaz”.

The consideration of the case continued 6.5 years, so you definitely cannot call this process short. On April 13, 2023, the press service of “Naftogaz” announced a win in court and an award by the court of 5 billion dollars to the commercial company, which should be recovered from Russia.

 

Will Russia pay «according to the bills»?

It should be understood that even after the end of the war, Russia will continue to act in its own interests. And of course, one of these interests is the prevention of payment of reparations for Ukraine. This was also emphasized by the Russian liberal, blogger and public figure Mikhail Svetov, with whom we spoke earlier:

«The task of the Russian politician is to break into pieces, but not allow reparations and reduce the costs of Putin’s war for Russia. Will it be possible to achieve this? Not a fact. But this is what every Russian politician should strive for. As well as the return of what was looted in Russia back to Russia».

And in a video on his YouTube channel, he explained:

«I understand why Zelenskyy, Arestovych and Podolyak demand reparations from Russia. However, I don’t understand why reparations for Ukraine are sought by people who call themselves «Russian politicians» and who for many years went side by side with me to rallies with the slogans «You don’t even represent us»… How did it happen, that at the moment when Russia most needs your protection, you, following Margarita Simonyan and Volodymyr Solovyov, confused Russia with the president’s ass… It becomes extremely unclear why the responsibility for the war should be borne by the victims (ed. civilian Russians) of the regime that declared it».

Regarding this topic, we also spoke with Vitalii Lebediuk, Director of the School of Political Analytics «POLIS» of the National University «Ostroh Academy». He explained under what conditions «Ukraine will be able to count on reparations:

«The key in this matter is the victory of Ukraine in the war, since reparations are collected from the aggressor state, in this case Russia, in favor of the victim state. Russia’s military and political leadership is trying to avoid payments by imposing so-called «peace talks» on Ukraine and its allies. However, after the successful counteroffensive and the victory of Ukraine on the battlefield, Russia will be forced to pay reparations, which will be specified in the post-war treaty».

He also added:

«From a political point of view, Russia’s avoidance of reparations will further isolate it in the international system. And we must take into account that the world is quite globalized and everything is very interconnected, so reputational losses are the worst. What we are observing now. Along with this, Russia must undergo the so-called desacralization of imperial/colonial ambitions and awareness of guilt. This is quite an important point, which should become a fuse at the mental level. The same thing happened in post-war Germany. In this context, hopes are only for democratic forces in Russia and their ability to complete the Soviet Union 2.0 project. Otherwise, the process of collecting reparations will be problematic».

A similar opinion is held by the Russian opposition politician and head of the “Democratic Choice” party, Vladimir Milov.

«We will wash away this for a long time, we will pay Ukraine reparations of at least hundreds of billions of dollars, if not a trillion. They destroyed a huge, beautiful country to the ground. Unfortunately, we will have to restore it with you (ed. Russians) … I am often asked how this will affect the reforms and restoration of Russia after Putinism. It will seriously complicate things. Putin welcomed us with economic growth of 7% per year and huge oil revenues, more than 4 trillion dollars in 20 years. And he leaves with nothing — with seized reserves, with an empty cash register, with defaulted bonds, with a devalued ruble, etc». 

Vitalii Lebediuk sees the danger in the «freezing of the conflict» by Russia, which can allegedly use it to avoid responsibility.

«The only way to avoid the collection of reparations, which Russia resorts to, is to freeze the conflict and conduct peace negotiations. However, Ukraine and its allies understand the consequences of such concessions. Therefore, the only and realistic way to collect reparations is the victory of Ukraine on the battlefield and the conclusion of a peace treaty that will provide compensation for the damage caused. However, such a path has a number of threats, so Ukraine at the diplomatic and political level is trying to promote other options for collecting funds».

He also noted that it would be a good initiative to additionally collect reparations from Russia for the Holodomor (1932-33).

«As of today, this is a good initiative, and it needs to be promoted on the international stage. Although this issue seems secondary against the background of Russia’s military aggression, it should not be put on the back burner. In 2003, the UN General Assembly failed to recognize the Famine (1932-1933) as a genocide of the Ukrainian people, because it was Russia that blocked the decision and conducted «educational work» among other countries. Therefore, this issue must be constantly raised at the international and diplomatic level and be recognized by the UN. This, in turn, will become the legal basis for the procedure of recovery of damages caused to the Ukrainian people».

We asked Oleksandr Boyaryntsev, about how the international community views reparations from Russia. He said that some countries have already taken measures that brought Ukraine closer to creating a compensation fund and receiving reparations.

In particular, it is:

• adoption by the UN General Assembly at the 11th extraordinary session on November 14, 2022 of Resolution Res. L.6/2022 «Further measures of protection and reparations for aggression against Ukraine». The UN General Assembly recommended the member states to create an international damage register;
• making changes to the legislation of Canada, which allow, in the case of concluding a corresponding international agreement with Ukraine, the transfer of seized Russian assets for the restoration of our country.

Indeed, Canada is so far the only country that has amended its legislation to help Ukraine in the post-war period.

The issue of confiscation of property is currently regulated by the following legislative acts:

• Law «On Management of Confiscated Property» (SPMA);
• Law «On Special Economic Measures» (SEMA);
• Law «On Justice for Victims of Corrupt Foreign Officials» (JVCFOA).

The SEMA Act received new provisions regarding its purpose, including: giving the Government of Canada the power to take economic measures against certain persons in circumstances where an international organization of States or an association of States of which Canada is a member calls upon its members to take such action.

«We expect that other countries will join Canada’s initiative and adopt their own laws based on the already existing legal framework from Canada. So, in particular, the Government of Great Britain declared that it was ready to adopt the experience of Canada, but there have been no corresponding changes in British legislation. Therefore, Ukraine will need to conclude international agreements with such countries to receive confiscated Russian funds and property».

However, in addition to the support of our country in the international arena, there is also opposition. Boyaryntsev said this:

«A clear position at the international level can be seen, at least, on the basis of the countries voting for the resolution of the UN General Assembly, which was about the use of Russian assets abroad to compensate for the damages caused to Ukraine. In addition to Russia and Belarus, the Bahamas, Central African Republic, China, Cuba, North Korea, Eritrea, Ethiopia, Iran, Mali, Nicaragua, Syria and Zimbabwe voted against the resolution”.

Iran expressed its position after refusing to vote for the relevant UNGA resolution, noting that:

• the adoption of the resolution went beyond the competence of the UN General Assembly;
• resolution, will not contribute to the resolution of the «conflict in Ukraine», and at the same time will allow certain countries to use it for their own political purposes.

The Chinese representative at the UN clarified the claims to the mentioned resolution:

• the UNGA actually resolves the issue of legal responsibility in the resolution, not being an international judicial body;
• the resolution envisages the introduction of a mechanism that is still not legally prescribed in detail and does not correspond to usual practice.

Boyaryntsev added that the creation of a tribunal is being considered at the international level among the methods of bringing Russia to material responsibility.

«But there is also an option with the creation of a hybrid tribunal, which should be created in Ukraine with the participation of foreign judges. This option was discussed during a number of international meetings. Such a tribunal will consider, at least, the issue of criminal responsibility for the crime of aggression. At the same time, the creation of such a hybrid court is not possible until the end of martial law, because for this it is necessary to make changes to the Constitution of Ukraine».

Therefore, the situation with reparations from Russia remains at the stage of development and improvement. The main condition for the implementation of this process should be Ukraine’s victory in the war, which will certainly happen. Russia will do everything in its power to obstruct justice and avoid responsibility. Our mission is not to forget about her crimes and do everything so that the aggressor gets what he deserves.

 

Tatiana Stelmakh