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Laurence Tribe, a pre-eminent American constitutional scholar, has often grabbed headlines when issuing weighty legal judgments on matters such as Donald Trump’s presidential bid and America’s debt ceiling.
Now he is creating waves again — but this time over Ukraine. For just as Ukraine’s president Volodymyr Zelenskyy was asking for support from the UN General Assembly this week, Tribe co-authored a 187-page legal analysis that urges western allies to give Ukraine the estimated $300bn of Russian state assets they froze last year.
At first glance, this seems a non-starter: Janet Yellen, US Treasury Secretary, said last year that transferring assets would be illegal under US law, and some legal scholars consider the idea a breach of so-called “sovereign immunity”. However, on Thursday Yellen unexpectedly softened her stance, expressing support for a European proposal to transfer the profit generated on Russian assets — an estimated $3bn a year — to Ukrainian reconstruction.
Tribe is urging Yellen to go further: he insists that America’s 1977 International Emergency Economic Powers Act would let the west transfer all the $300bn to Ukraine, and suggests there is international precedent and law to support the move, too. Or as the report notes: “It would be a cruel irony to deny Ukraine the funds it needs by invoking respect for Russia’s ‘sovereignty’ and ‘property rights’ when Russia has chosen to trample on [those] of the Ukrainian people.”
This argument has backing from a bipartisan group of American grandees, such as the Republican Robert Zoellick (former president of the World Bank), and Democrat Lawrence Summers (former Treasury secretary); the latter told me this week, during a debate with Benn Steil, economist at the Council on Foreign Relations, that “there are numerous precedents” for this.
Unsurprisingly, the Ukrainian government agrees — and is exploring creative ways to quell the logistical and legal impediments. During a visit to Kyiv last month, for example, I heard Rostyslav Shurma, deputy head of Zelenskyy’s office, suggest using the assets to back the issuance of reconstruction bonds, via securitisation, or help de-risk international investments in Ukraine, as loss-absorbing capital for deals. “We need [this money] now,” he observed, noting that “we think [securitisation] would be more effective” to help Ukraine than a simple transfer.
Is this a good idea? I, like many, feel torn. On a personal level, I passionately support Ukraine in its fight (not least because I experienced the brutality of Russian imperialism myself when I previously lived in the Soviet Union). Thus I see an overwhelming moral argument to use those assets.
There is also a powerful political and economic case: reconstruction will cost at least $400bn, according to recent estimates — and western taxpayers may rebel if asked to shoulder this. The current political row in Poland around Ukrainian grain exports gives a foretaste of that potential voter backlash.
But I can also see practical drawbacks in this move. One problem, as Steil told me this week, is that asset transfer could (further) undermine international faith in the safety of dollar assets. Another is that it might also reduce the west’s leverage in its dealings with Russia. “We need to maintain the reserves as a bargaining chip [to] prepare for the day when there’s a new Russian regime that will be willing to come to the table,” says Steil.
A third problem is that the move could unleash judicial challenges, particularly given Yellen’s past suggestion that it would be illegal (though she has seemingly backtracked on this). Then there is a transatlantic leadership issue: as Tribe’s report notes, two-thirds of that $300bn pot sits in Europe, not America — and the EU seems even more timid than the US Treasury on the issue partly because of its fragmented legal and political structures. If the US were to act alone, this could create splits in the western coalition.
However, Tribe denies that such fracture is inevitable: rather, he thinks that if Washington shifted course it would make it far easier for Europe to follow, particularly since Canada has already taken the lead in this direction by creating a legal framework for an asset transfer.
Possibly so. However, Brussels never likes taking its lead from Washington. So I suspect that the most practical — and ethical — path forward is to take baby steps. Giving Ukraine the profits earned from those frozen Russian assets is one sensible move, and European legislators have already signalled they might accept this. Canada could also start a pilot project by securitising those frozen assets it controls, to encourage others.
Both these strategies would keep powder dry for future negotiations. But they also send a strong signal that Russia’s aggression will not go unchecked, could provide vital assistance to Ukraine and prove to western taxpayers that they need not carry the burden of support alone.
So in that sense, Yellen’s statement is welcome. No, it is not as ambitious as Tribe might like, let alone as eye-catching as a gift of long-range missiles. But just as the west has (slowly) become more imaginative and ambitious with its military aid, it needs to do the same for finance. Both matter for Ukraine’s future — and there is little time to lose.
