Ukraine and the “Pottery Barn rule”

The Pottery Barn rule is an American expression that means that if you go inside a store, "if you break something, you bought it, or you’ve got to remake it", by which customers responsible for damage done to any merchandise on display. 

In the case of the Russian invasion of Ukraine, when and if the dust settles, the bill to Putin and his citizens will be overwhelmingly enormous. President Biden has vowed to make Vladimir Putin “pay a very heavy price” for invading Ukraine. 

The cost thus far has included financial sanctions and possible criminal liability for war crimes, but it should not end there. If Ukraine manages to push back Putin’s army and regain its independence, it will need a massive influx of cash to recover and rebuild. 

This means that the international community must make sure Russia pays for everything. During the course of history, victors of war have often demanded financial reparations from vanquished aggressors. In the case of Ukraine, even if Russia ultimately decides to cut its losses and withdraw, Ukraine will be in no position to compel Russia to provide restitution for the devastation it has created. 

So far, the damage estimates are getting close to $100 billion and will probably greatly exceed that amount when all is said and done. Fortunately, western powers have frozen assets that include Russian central bank reserves, Oligarchs’ private bank accounts, real estate and mega-yachts scattered around the world. Collectively, these frozen assets are valued at about half a trillion dollars (Russian central bank reserves are around $630 billion, of which more than half are frozen, plus assets of people associated with Putin that might be worth at least $300 billion), much money that could be used to help Ukraine rebuild. 

While these frozen assets can’t be legally confiscated, the international community can refuse to unfreeze them until Putin pays reparations. Under international law, Russia is obligated to compensate Ukraine for the harm produced by its illegal war of aggression. 

There are a variety of ways that Russia could satisfy this obligation. It could negotiate a comprehensive lump-sum settlement. It could establish a bilateral tribunal with Ukraine like the Iran-US Claims Tribunal. It could enlist the help of the UN just like for the Compensation Commission that handled civil claims arising from Iraq’s unlawful invasion and occupation of Kuwait in the early 1990s. 

In each of these scenarios, frozen assets could be used to compensate Ukraine. Let’s simply hope that the West remains united in forcing the Russian government to pay a just price for its barbaric invasion and its human and material consequences!