The Danger of the REPO Act: A Strategic Blunder in the Making

The Washington foreign policy establishment’s perilous misstep

The Washington foreign policy establishment is on the precipice of making yet another strategic blunder. The Senate is poised to ram through the Rebuilding Economic Prosperity and Opportunity (REPO) for Ukrainians Act. This legislation will provide the president the authority to confiscate Russia’s frozen sovereign assets in the United States and transfer them to Ukraine for its reconstruction.

Consequences of economic warfare

Confiscating Russia’s sovereign assets is an act of economic war. It may make Washington feel virtuous, but it will not bring peace. Passage of this bill will only reinforce the view of hardliners in Moscow that Russia’s war lies not just with Ukraine but really with the United States and the West. Any hope that the United States and Russia could work toward stabilizing or improving relations will subsequently be destroyed.

Many historians believe that economic warfare can quickly escalate into violent hostilities. This bill’s impacts could be felt beyond economic terms. The destabilizing precedent that western countries would set through seizing assets to end a war they are not openly involved in is a dangerous path to tread. It would broaden the coercive actions that states could take for disputes to which they are not a direct party.

Reinforcing Moscow’s stance and risking Ukrainian lives

There is no justification for Russia’s invasion of Ukraine, but enacting this bill will make peace less likely. Ukrainians have courageously defended their country for nearly two years, but even Ukraine’s former top military commander General Valery Zaluzhny now admits that the war has reached a stalemate. Confiscating Russia’s frozen assets might be a potential bargaining chip during negotiations, but once Congress provides the president the authority, carrying out the policy will be inevitable to avoid looking weak. Confiscation instead will only convince Moscow that there is no negotiated settlement to be had with Ukraine.

Russia’s retaliation, threatening to confiscate Western assets worth billions of dollars, also foreshadows further hostility.

A blow to global trust and America’s financial strength

Confiscating Russia’s assets will establish a dangerous precedent, undermining the trust of other nations. This bill unquestionably raises concerns among countries, including China, that the United States can no longer be trusted as the guarantor of the global economy. The resulting de-dollarization, entailing a shift away from the dollar as the dominant global currency, will not only weaken America’s financial strength but also jeopardize the prosperity Americans have come to expect.

Flaws in the “rules-based international order”

Amidst the United States’ rhetoric on the “rules-based international order,” confiscating assets of a peaceful nation raises questions about America’s commitment to international law. Engaging in economic reprisals against a nation not directly involved in a conflict is the stated prerogative of injured states, not of third parties. Such actions could undermine Washington’s demand for global compliance with the rules of engagement, presenting a hypocritical narrative, potentially exploited by the Kremlin to undermine American credibility.

Rebuilding America’s foreign policy

In a multipolar world, Washington can no longer expect to act with impunity, especially when dealing with a nuclear power like Russia. The foreign policy establishment, plagued by repeated disasters over the past three decades, must acknowledge the perils of this bill, step back, and reassess a more prudent approach to securing national interests and promoting global peace.

A profound reckoning and a commitment to fixing the broken foreign policy currently in place are essential. This involves rejecting the REPO Act and considering alternative methods to navigate the complexities of the Ukrainian conflict without risking further escalation and undermining America’s global standing.