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Estonia is working on a solution for using sanctioned assets to compensate war damages to Ukraine

Republic of Estonia - Ministry of Foreign Affairs

15.06.2023

At a cabinet meeting, the government discussed ways of using the frozen assets of individuals linked to Russia's aggression to achieve the complete failure of the aggression and contribute to rebuilding Ukraine. The government supported the proposal to draft legislation for this purpose.

"Russia continues its war in Ukraine and devastation in Ukraine grows with each passing day. It is unfair that the taxpayers of democratic countries must pay for the war damage caused by Russia," Prime Minister Kaja Kallas emphasised. "Ukraine is a victim of Russia's war and must be compensated by Russia. This is why we are working on a solution that would allow the use of frozen assets, which we have seized with sanctions from Russian citizens and companies, to compensate war damages. Estonia is the first country in the European Union to start working on a solution for using sanctioned assets and other countries can use this model if they wish."

Foreign Minister Margus Tsahkna said it was important to provide deterrence by sending the message that aggression will not go unpunished and there will be compensation for the damage caused by aggression. "The existence of such a mechanism raises the cost of the aggression, especially if similar solutions are used by other countries or the European Union," he said.

According to international law, unlawful damage must be compensated. Russia has gravely violated the UN Charter and the prohibition of the use of force in international relations. Compensating the damage caused by the aggressor when Russia is not compensating the damage would be a so-called advance payment from frozen assets. The precondition for using frozen assets is an international agreement with Ukraine or with an international compensation mechanism to keep track of damages and compensations. The first step is the establishment of a register of war damages in Ukraine at the Council of Europe. The Ministry of Foreign Affairs and the Ministry of Justice have prepared draft legislation for amending the International Sanctions Act that will be submitted for approval in the near future.