The United States is not just a leader in the democratic world, but also a country that sets the tone in international legal matters. Further confiscation of Russian assets around the world largely depends on the decisions of the United States.

The potential confiscation of Russian assets is a high-profile and sensitive issue, but it is certainly not unique to the United States.

Since the 1990s, the United States has been responsible for imposing two-thirds of the world's sanctions, including on the sovereign assets of Cuba and Afghanistan.

Both cases are only partially similar to the Russian assets one, but they are useful for understanding the prospects for compensation to Ukraine at the expense of the Russian assets.

Only some goals have been achieved, but in accordance with the law

Following the Taliban's seizure of power in Afghanistan in August 2021, the Biden administration announced a freeze on Afghan sovereign assets in the United States, as it was unclear who had the legal authority to access the account: the government-in-exile or the new Taliban administration.

On February 11, 2022, the President of the United States issued the Executive Order on Protecting Certain Property of Da Afghanistan Bank for the Benefit of the People of Afghanistan.

Pursuant to this Order, all property and interests in the Da Afghanistan Bank — totaling $7 billion — are blocked and cannot be sold in any way.

The Order also stated that

the United States will transfer part of the frozen money — $3.5 billion — to compensate the victims of the September 11, 2001 terrorist attack.

Within the enforcement of this Order, a part of the funds — $3.5 billion — was transferred to the Afghanistan Fund, established in Switzerland in September 2022, for humanitarian and economic assistance to the country, bypassing the Taliban. So far, the Fund's case can be considered a success, and no doubts have been raised about the legitimacy of the use of Afghan sovereign assets.

The fate of these assets was also the subject of a court case.

In February 2023, the New York District Court ruled that the United States, represented by a group of plaintiffs, was not entitled to a part of Afghan assets to be used as compensation for the victims of 9/11, as the US courts lacked jurisdiction to authorize their confiscation.

The ruling also states that US courts cannot allow the Federal Government to use Afghan assets, as this would mean that the United States recognizes the legitimacy of the Taliban government. The court concluded, that the United States claims compensation for the terrorist attack of September 11, 2001, but this cannot be done at the expense of Afghan frozen assets.

Goals have been achieved, but not in accordance with the law

The opposite situation happened in case of Cuban assets. The US economic sanctions against this country date back to the early 1960s, when the Cuban government under Fidel Castro expropriated the property of American citizens and corporations in its territory.

There is no exact amount of Cuban assets frozen in the United States. However, rough estimates suggest that it is more than $500 million.

The key regulatory act governing financial restrictive measures against Cuba is the Cuban Assets Control Regulations, issued by the US Secretary of the Treasury on July 8, 1963.

According to the document, all property of Cuba and its citizens that is under the jurisdiction of the United States is blocked.

In 1964, President Lyndon Johnson signed the bill relating to claims of U.S. nationals against the Government of Cuba. The document also transferred certain Cuban sovereign assets to the United States but did not specify which ones.

The proceeds from the sale of the provided assets are not available to the American citizens whose property was expropriated, as they will be used to cover administrative expenses.

As of 2023, there is no public information about any actions of the US government regarding the aforementioned Cuban assets.

In 1996, the Cuban Liberty and Democratic Solidarity Act was adopted. In accordance with the law, victims of Cuba's actions had the right to sue for compensation from the Cuban assets frozen in the US jurisdiction.

Although the Foreign Sovereign Immunities Act protects their property from claims for damages by private parties, it provides for a number of exceptions.

One of them is the amendment to 28 U.S.C. §1605(a)(7), which states that lawsuits against certain foreign states, including Cuba, for committing or supporting terrorist acts fall under the exception from immunity. Under this provision, US citizens are entitled to triple damages, plus attorneys' fees.

In 2000, Congress passed a law that provided for $97 million of Cuba's frozen assets to be paid to the families of American pilots of Cuban descent shot down by the Cuban Government in 1996.

In 2006, a New York Federal Court ordered the payment of $91 million from Cuban assets frozen in the United States to the families of two men who died after a failed U.S. operation in Cuba in 1961.

Russia: Which Way Will the United States Choose?

Since there are more than sixty years between the cases of Cuba and Afghanistan, the legal regulation in them is different.

At the time of the US actions against Afghanistan, the International Emergency Economic Powers Act and the National Emergency Management Act (both adopted after 1960) were already in effect. In the case of Cuba, a number of laws were passed that dealt specifically with the Cuban crisis.

Moreover, Afghanistan as a state is not considered a party to the process, all US actions are directed against the Taliban, whose members are recognized, according to Executive Order 13224, as specially designated global terrorists. While Cuba has the status of a state sponsor of terrorism. 

In the case of Russia, the United States will most likely combine the previous experience of Cuban and Afghan cases.

It is advisable to take a cue from Cuba in adopting niche legislation solely for the circumstances of Russia's war against Ukraine. Whereas, the development of the federal regulatory framework will allow for a more detailed justification of actions regarding the Russian funds.

Following the bitter lesson of seizing some of Afghanistan's sovereign assets, the United States will work more closely on confiscation mechanisms.

These theses are confirmed by the fact that since the full-scale invasion, the Senate has already considered five confiscation bills that focused exclusively on Russian property, the latest of which is REPO.

Nevertheless, the case of confiscation of Russian assets will still be unique. Most likely, Russia will be recognized neither as a terrorist state nor as its sponsor. The United States usually takes such measures when such actions have been taken against itself, not third countries. The United States will also have to choose a mechanism for confiscation and a way to transfer the funds to Ukraine.

The most important thing is to legitimately and effectively bring this process to its goal, i.e., compensation to Ukraine at the expense of Russian assets. The cases of Cuba and Afghanistan prove that the United States has such capabilities.

That is why it is important to find the political will in Washington to launch the relevant processes.

By: Sofia Kosarevych 

Analyst, Dnistrianskyi Center

The research was conducted as part of the ANTS Russian Assets as a Source of Recovery of the Ukrainian Economy Project implemented in cooperation with the National Democratic Institute (NDI) and funded by the National Endowment for Democracy (NED).