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Make Russia’s Oligarchs Pay for Putin’s Brutal War in Ukraine

Russian Military TOS-1. Image Credit: Creative Commons.
Russian TOS-1 firing. Image Credit: Creative Commons.

Send the Bill to the Oligarchs  – Whether a government is democratic or authoritarian, the almighty dollar and similar international currencies serve as a powerfully persuasive “hard-power” tool.

Over 1.5 million refugees and counting. Massive physical destruction of infrastructure in Ukraine, a democracy. Sanctions and seizures have so far been surprisingly effective against the Russian government itself, and a few of the oligarchs who empower Putin for their own kleptocratic gains.

But the urgency of the horrific attacks on civilian populations has created immediate emergency needs, and simply can’t await the slow impact of “drip-drip” sanctions so far announced by the EU and the US against Putin and his cronies.  Sanctions will not appreciably alter the ultimate reality that economic actions are a poor, too-slow foreign policy tool with which to deter aggressors in a time-urgent crisis.  Russia has some cushion in its financial coffers, and is developing backdoor international banking access via silently cooperative Middle East banks, and China.

Refugees now, and rebuilding Ukraine in the months ahead, will require massive Marshall Plan-like infusions of aid.  The UN is asking for a $1.7 billion pool to cover initial costs, and President Biden has asked the U.S. Congress for a $10 billion aid package.  The European Union is providing €1.2 billion in humanitarian loans and another historic €500 million in arms aid.  But should taxpaying citizens of peaceful countries, folks who did not cause the problem, pay?  Amounts from Western coffers to support both refugees and rebuilding+ are certain to grow exponentially into the many billions as the destruction and dislocations grow.

So Who Gets the Bill? Hit the Oligarahs 

So who gets the bill?

The West ought to demand the costs be borne by the perpetrators—both from the Russian government’s accounts, but also more importantly those of the oligarchs who have backed and empowered Putin without question while compiling literally billions of dollars in kleptocratic assets.  No leader, even Vladimir Putin, can carry out his programs (or pogroms) without followers who empower him. The oligarchs. Followers, however, can also be inspired to constrain a leader, as Joseph Nye of Harvard wrote in Powers to Lead.

Because senior Russian politicians and the oligarchs intuit better than any of the nature of the Russian system, they have almost uniformly set up safe haven packages abroad—homes, bank accounts, and even alternative corporations.  Immediately slamming shut these safety valves could lead in relatively short order to internal constraints on Putin’s aggression.  A wide array of possible actions exist, among them:

– Take away their playground. Cancel all Russian visas, and return to the Soviet-era namecheck system where almost no Russian will receive a visa unless cleared through intelligence systems.  Especially, this includes all children and extended family of each oligarch—no safe haven in Western universities.

– For those elite Russians already abroad, detain them under immigration laws after their visas are canceled. They empower Putin and should be deported back to the homeland which enriched them.

– Seize and sequester Russian sovereign accounts, and all bank accounts not only of a few oligarchs but a wide swath of oligarchs, corporations in which they are invested or executives, as well those of their family and friends who are often are used to camouflage the true owner.

– Seize all real estate properties of the oligarchs and their corporations.

International court precedents and political history contain guideposts on methods by which the perpetrators themselves can be presented with the bill for their folly.

The CAATSA list (Countering America’s Adversaries Through Sanctions Act)  dating back to Crimea sanctions in 2014 provides a starting point.  For an immediate start and maximum deterrent effect, the EU and US, along with any other right-minded nations who wish to join, should immediately, completely, and fully seize sovereign Russian accounts in Western banks, and move comprehensively against all of the more than 200 senior political figures and billionaire oligarchs on the CAATSA list not already sanctioned, as well as their extended family and interests–all at once.  Then look to expand the sanctions in quick lots against the additional second tier of 500 or more key elites who stoically support Putin.  If yachts and assets are moved to more accommodating countries, sanction those countries as well if they refuse to seize and turn the assets over.

In much more detail, the sanctions package leveled against Iran serves as one model; the Congressional Research Service’s 2022 compendium report runs to over 90 pages of numerous possible actions.

The Crucial Next Step – Reparations

The key to everything is the next step, once the bank accounts, homes, villas and yachts have been seized–create a Western escrow account into which all these assets would be placed, to aid fleeing refugees, and to rebuild Ukraine in the future. Based on the CAATSA list alone, the confiscated assets could run $100-200 billion (each person or entity listed had holdings over $1 billion).  Payments for oil & gas flows still being sent from Russia could be placed in this escrow account; no embargo on Russian oil & gas would be needed, instead, payment for ongoing supplies would become revenue for reconstruction reparations.

Make clear as the assets are seized that the government’s and oligarch’s assets would never return to them. The International Court of Justice’s Iran Hostages case stands for the international precedent that assets of a regime that grossly violates the basic sovereignty of another nation can be seized and utilized as reparations for the victims. By extension, those who empower that nation-state and its leaders should equally be held financially liable.

All this may sound too outside the box of normal diplomacy in the international realm. But the Russian invasion of a sovereign democracy has laid waste to the prior largely peaceful world order, and aggressive, unheard-of actions are needed to rebalance that order. Will even such broad-ranging sanctions work? Whether they completely deter the aggression and force a Russian withdrawal, is an open question. Rather, a rebalanced and changing world order will disconnect the empowered Russian corrupt classes from the rest of the world for a long time to come.

Most importantly, some of the costs for the criminal assault will be billed to the investors in the “enterprise,” rather than innocent citizen taxpayers in countries seeking to provide humanitarian aid against war crimes. Over time, those same followers of Putin who today empower him might decide it is time to end his reign; Russians have their own leadership change tool, called defenestration.

Richard Sindelar, @FSOProf, a retired U.S. diplomat with three tours of duty in the State Department’s Bureau of Intelligence and Research, now serves as Director of the Center for International Studies at Houston’s University of St. Thomas, where he teaches courses in U.S. foreign policy and international law, among others.

Written By

Richard Sindelar (bio), @FSOProf, a retired U.S. diplomat with three tours of duty in the State Department’s Bureau of Intelligence and Research, now serves as Director of the Center for International Studies at Houston’s University of St. Thomas, where he teaches courses in U.S. foreign policy and international law, among others.