The recent explosions at Nord Stream have reminded the world that Russia is ready to act boldly and will stop at nothing

At least 131,300 civilian homes, 188,100 vehicles, 934 educational institutions and 2,472 healthcare facilities have been damaged in Ukraine.

More than 35,000 war crimes have been recorded, over 90% of them against civilians.

This is only a part of the atrocities committed by the Russian army during the war. Is this enough to recognise Russia as a state sponsor of terrorism?

What are the risks for the United States if Russia is designated a state sponsor of terrorism and what are the consequences for Ukraine?

The Institute of Legislative Ideas is researching the issue of confiscation of Russian assets and legal mechanisms for recovering funds from the aggressor for the reconstruction of Ukraine.

When researching the topic of recognising Russia as a sponsor of terrorism, we were most interested in the economic benefits and risks for Ukraine. We made a legal analysis of the advantages and disadvantages of recognising Russia as a state sponsor of terrorism.

The United States, with one of the most serious legislation in the world, is hesitant to take such a step. To remove these doubts, the international working group on sanctions against Russia published a document entitled ‘The Case for Designating the Russian Federation as a State Sponsor of Terrorism’.

We have also signed this document. We explain why.

What are the peculiarities of this status under US law? Why are world leaders in no hurry to recognise Russia as a state sponsor of terrorism? How can the risks of this status be eliminated? What could make the United States take such a step?

Is Russia a state sponsor of terrorism?

The United States has designated North Korea, Syria, Iran and Cuba as state sponsors of terrorism. Canada has granted this status to Iran and Syria since 2012.

There is no single list of criteria for recognising states as sponsors of terrorism. However, US legislation contains many approaches to the definition of terrorism. One of them is ‘intentional, politically motivated violence committed against persons not involved in hostilities’.

Given the crimes of the Russian Federation, its actions fall within the definition of terrorism. They even go beyond ‘sponsoring terrorism’, as the main perpetrator of these terrorist acts is the Russian army, an entity of the Russian state.

The working group supports the opinion of the US Congress that the State Department should recognise Russia as a state sponsor of terrorism. The Canadian government should do the same.

What are the consequences for Russia?

If Russia is recognised as a state sponsor of terrorism, the following consequences should be expected.

1. Restrictions on transactions. It will be illegal for US individuals and legal entities to engage in financial transactions with the Russian government. This will lead to strict control of all transactions with state-owned banks of the Russian Federation, state-owned enterprises and persons associated with the Russian Federation.

It will also restrict foreign aid from the United States and organisations of which the United States is a member. The export and sale of arms will be banned, and additional financial restrictions will be imposed.

2. Loss of sovereign immunity. Russia will lose its immunity from legal proceedings against it and the seizure of its property to compensate victims.

This will allow US citizens to sue the Russian Federation for material damages for injuries or death caused by terrorism. The courts will be able to award monetary compensation to victims from the proceeds of the sale of Russian property located in the United States.

In this case, there will be threats to Ukraine's financial interests. One of them is that only Americans will be able to claim Russian assets.

Moreover, the president may freeze some of the Russian assets to be used to compensate American citizens. The sanctions group, on the other hand, stresses the need to block this money for Ukraine's recovery.

The introduction of such a measure by the United States would set an example to other countries of the real possibility of bringing Russia to justice in the courts.

3. Secondary sanctions. Having designated Russia as a state sponsor of terrorism, the United States and its allies can impose financial and trade sanctions on other countries, companies and individuals that continue to cooperate with Russia.

4. Individual sanctions. The designation of a state sponsor of terrorism would immediately extend U.S. financial sanctions to thousands of individuals associated with Russian state institutions and politicians. This will significantly increase the level of financial control over many Russian companies.

5. Symbolic impact. Granting this status to Russia will draw more world attention to the crimes of the Russian regime against Ukrainian civilians.

In addition, most countries and companies that have previously signed contracts with Russia or planned to do so will refuse to cooperate with a state sponsor of terrorism because of reputational risks, despite the potential benefits, even if possible secondary sanctions do not affect them.

Why the US is in no hurry

Given all the obvious benefits, President Biden and Secretary Blinken believe that granting Russia this status carries certain risks.

Designating Russia as a state sponsor of terrorism could lead to significant delays in food exports and cause famine in certain countries, as well as jeopardise agreements on the transportation of goods through the Black Sea. This is a significant risk that needs to be taken into account and the possible consequences minimised.

The designation of a state sponsor of terrorism could also deteriorate relations between the US and Russia, including the possibility of an official severance or suspension of diplomatic relations, which would seriously complicate US mediation in the conflict.

Opening up the possibility of private lawsuits by US citizens against the Russian Federation and their enforcement carries the risk of reducing the total amount of assets and resources that could contribute to the reconstruction of Ukraine.

However, all these threats can be minimised. The laws of the United States provide sufficient flexibility to develop effective solutions.

First, the laws governing this status provide for the possibility of establishing an exception to the application of restrictions to continue cooperation with Russia on joint humanitarian efforts for national security purposes.

Secondly, the US leadership can establish an exception to the restrictions, which would allow for communication with Russian diplomats within the framework of American national interests.

When Iran was designated as a state sponsor of terrorism, direct negotiations were held with Iranian diplomats to conclude the Joint Comprehensive Plan of Action (JCPOA), and the US president and other officials paid diplomatic visits to the North Korean leadership.

Thirdly, the State Department could decide that the confiscated assets would not be subject to the right of American citizens to claim compensation, and that such assets would be used only for the reconstruction of Ukraine.

In addition, it could be established that if the Russian army withdraws from the territory of Ukraine, the status of a state sponsor of terrorism for the Russian Federation will be cancelled. The US House of Representatives and the Senate could specify this in a joint resolution. If this is done, Russia may have more incentive to end the war.

Alternatively, the US, Canada and other states could issue a joint declaration designating Russia and its governing bodies as the organisers of the terrorist attacks in Ukraine and imposing additional joint sanctions.

These restrictions could be close to the designation of a state sponsor of terrorism, but without granting Russia this status under US law.

The Ermak-McFall Working Group concludes that the benefits of designating Russia as a state sponsor of terrorism outweigh the risks. The Russian Federation continues to commit deliberate acts of terrorism against the Ukrainian people, so designating it is a proportionate response to such actions.

Source: Ekonomichna Pravda