Reparations: when and how much money should Russia pay Ukraine?

Reparations are an essential aspect of post-war treaties and agreements. International law obliges the state to be financially responsible for crimes and illegal actions. Having launched a full-scale invasion, Russia must compensate Ukraine for its losses; how and to what extent — learn from the article.

Reparations are full or partial compensation by the aggressor state for the damage to the country under attack. They are part of transitional justice, including judicial and non-judicial means of overcoming trauma. Types of reparations include compensation, restitution, rehabilitation, satisfaction or guarantees of non-repetition.

In the case of Russian reparations, many legal documents can already be invoked to hold the country accountable. Among them is the UN resolution of November 16, 2022, on the payment of reparations to Ukraine. The mechanism of UN resolutions is an essential tool in the diplomatic field. Their adoption becomes an argument in a dialogue with representatives of the countries that supported the document creating a basis for action. For example, it will help countries transfer frozen Russian assets to Ukraine.

On January 3, the Prime Minister of Ukraine announced that the damage caused by Russia during the full-scale invasion exceeded $700 billion. According to a poll conducted by the group Rating, almost one in three Ukrainians has suffered financially due to Russian aggression. 

According to Denys Shmyhal, the state budget for 2023 allocates about USD 98 million for the Fund for Elimination of the Consequences of Armed Aggression. However, this amount covers only about 1% of all losses. Other governments, the IMF, the World Bank, and other organisations also provide assistance to restore destroyed and damaged facilities. However, after the war is over, it is Russia that must pay the money. 

On December 30, 2022, Shmyhal said that the government had launched a registry to collect data on damages and begun creating an international registry.

All details, terms and conditions of payment will be defined in post-war agreements. In the context of reparations, we can talk about compensation to the state, individuals, and legal entities affected by the full-scale invasion. Russia should pay for all destroyed and damaged objects. A decision on reparations could also set a precedent for paying not only material but also moral damages.

"In the issue of Russia's payment of reparations, we are returning to the institution of reparations that existed before World War II. We must return to the classical model and full payment of reparations by the aggressor party. And the issue of moral damages may also be an innovation introduced by Ukraine. Although there has been no precedent for states to pay reparations for moral damages before," says Olha Butkevych, Doctor of Law and President of the Ukrainian Association of International Law.

An important aspect is compensation for any direct or indirect damage caused by armed aggression, including the restoration of blown-up bridges, demining, etc. According to Butkevych, reparations will also include funds spent by Western partners on military assistance to Ukraine. 

"Our allies may raise the question that not all of these funds can be transferred directly to Ukraine. They can claim some of these funds, as partner countries are helping Ukraine," Butkevych said.

Olha Butkevych, Doctor of Law, identifies two possible ways to bring Russia to reparations.

Ukrainian authorities are working to find and freeze Russian assets. In particular, Deputy Prime Minister for European and Euro-Atlantic Integration of Ukraine Olha Stefanishyna said that by 2023, a legal framework should be formed to confiscate and transfer Russian assets to reconstruct Ukraine. To this end, the Prosecutor General's team has set up a group to develop an algorithm. Similar mechanisms can be used in the United States, the United Kingdom and other countries. 

"The first path includes movable and immovable property and financial assets. Frozen Russian assets are between USD 300 and 350 billion. However, there may be a problem here. For a long time, states have referred to the institution of jurisdictional immunities and the fact that the state cannot be deprived of its property. However, Article 31 of the Draft Articles on the Responsibility of States for Internationally Wrongful Acts, adopted by the UN General Assembly in 2002, states that each state is obliged to make full reparation for the damage caused to another state fully. Therefore, it is easier to seize the property of Russia as a state and its state-owned enterprises than from oligarchs," the expert says.

To legally use Russian assets as reparations, there are two Supreme Court decisions. The main one is the decision that determines that all losses can be lawfully compensated by the property that is on the territory of Ukraine. 

"This mainly refers to Russian banking assets. And this is the way for Ukrainian courts, which, when citizens apply, can decide to freeze and seize assets and use them to pay for damages," Butkevych emphasised.

This can only be implemented after the war, as Russia is currently refusing to pay reparations. However, after Russia's defeat, Ukraine will be able to refer to the 2022 UN resolution on reparations and demand compensation for all losses. 

Olha Butkevych gives an example: "There is an idea to create a reparations commission, which existed after Iraq's aggression against Kuwait. In addition to the commission determining damages, there is also the possibility of introducing a reparations tax. In Iraq, some amount of the oil trade proceeds was used to compensate for losses. In other words, we are talking about state foreign economic activity."

International law obliges us to pay. However, a scenario of evasion is possible. If Russia refuses to pay reparations, international law has a mechanism for collecting state funds abroad. Everything that belongs to Russia will be confiscated, Butkevych notes.  

Next, a reparations tax can be imposed on goods that the country supplies to the international market. However, these two ways will not cover the entire amount. 

"So we are going to the third way, which is only possible with a regime change," Butkevych says.

If Russia agrees to pay reparations, it can delay this issue. There is a principle in international law that states that a state cannot be imposed with obligations that call into question the humanitarian situation of its population. Olga Butkevych says that at one time, Iran was able to limit the impact of US sanctions by citing the humanitarian situation.

"The International Court of Justice then determined that sanctions cannot be imposed on humanitarian industries, including medicines and consumer goods," the expert emphasised.

As in the case of Russia, it is essential to have a legal basis on which other courts can rely to seek reparations from Belarus. Therefore, it is necessary to establish a tribunal for the crime of aggression, which will de jure define Russia and Belarus as aggressor states. With this definition, it is possible to bring them to justice. It will involve various courts and a possible reparations commission established based on a General Assembly resolution. 

"To bring Belarus to justice, we must define it as an aggressor state. If we take the UN resolution on the definition of aggression, there are all the grounds for this. The aggressor state is also the party that provides its territory," believes Olha Butkevych.