Will Putin pay $90 billion for Crimea?

By Korea Herald
  • Published : Jun 5, 2014 - 20:17
  • Updated : Jun 5, 2014 - 20:17
Ukraine has hit on a good way to keep Russia’s annexation of Crimea on the world agenda: Sue for compensation.

Russian President Vladimir Putin is trying to play a mind trick on Western leaders: Get them so worked up about the armed conflict in eastern Ukraine that they forget about Crimea. On Monday, acting Ukrainian Justice Minister Pavlo Petrenko offered a reminder in the form of a 17-volume calculation that values the territory, including such items as the 300 kilograms of gold kept at the Crimea branch of the Ukrainian central bank, at 1.08 trillion hryvnias ($89.6 billion). Acting Prime Minister Arseniy Yatsenyuk says his government intends to seek the court rulings required to seize Russian property in Ukraine and abroad as compensation. It has already filed suit with the European Court for Human Rights, and, according to Yatsenyuk, it will even use Russian courts.

The Ukrainians are probably aware that their chances are slim. International arbitration rarely succeeds in resolving territorial disputes, and then it requires at least some goodwill on both sides. In cases where special tribunals have reached settlements ― India and Pakistan over the Rann of Kutch salt marsh in 1947, Israel and Egypt over the Taba area in 1989 ― both sides stated a desire to resolve the issue and were willing to trust an impartial judge. The parties must “be willing to accept the fact that they may lose,” Carla Copeland wrote in the Fordham Law Review, commenting on such arbitration cases. “Thus, an arbitration agreement imposed upon the parties by the international community will not work.”

In Crimea’s case, the difficulty is that Russia doesn’t see it as a disputed territory. On March 16, a referendum was hastily held on the peninsula, and it was announced that an overwhelming majority of the population voted to join Russia. Yevgeny Bobrov of the Russian Presidential Council for Human Rights later visited Crimea and reported that the yes vote would have been far less convincing in a real plebiscite. Nonetheless, the Russian parliament officially accepted Crimea as part of Russia. Moscow now officially considers all the property “nationalized” by the Crimean government prior to the referendum as its own.

No international court has the authority to handle Ukraine’s monetary claims. Ukraine has said it would try international arbitration in Stockholm to litigate against Russia’s seizure of the oil and gas company Chernomorneftegaz CJSC, but the Stockholm tribunal’s jurisdiction in this case is not obvious. When the European Court for Human Rights ruled last month that Turkey should pay $124 million in damages to victims of its 1974 invasion of Northern Cyprus, the ruling concerned damages to specific people ― the families of Greeks who disappeared during the invasion and the residents of the Karpas peninsula, cut off from the rest of the island by the Turkish forces. Even so, Turkey refuses to pay.

Because Ukraine has named a specific price, some people in Moscow think it is haggling. “If they want to sell Crimea to us, they should say so directly,” Russian parliament member Yevgeny Tarlo told the Moscow daily Nezavisimaya Gazeta.

Money is probably not Kiev’s primary goal. By throwing large numbers around, threatening to sue and even filing suit with whatever courts agree to look at the case, the Ukrainian government is keeping the issue alive. In this age of short memories, a string of reminders that the annexation of Crimea was illegal and that all the Ukrainian property on the peninsula has, in effect, been stolen is a way for Kiev to ensure continuing international support. It is also part of President-elect Petro Poroshenko’s strategy to remind Crimeans that Ukraine remembers them and wants them back.

It’s probably too late for Kiev to win back Crimea: The West has clearly decided the annexation did not merit effective economic sanctions against Russia. To that extent, Putin’s mind trick has worked. Ukraine, however, can get substantial economic and security benefits from its status as a victim of aggression, and Poroshenko is not going to pass up that opportunity.

By Leonid Bershidsky

Leonid Bershidsky is a Bloomberg View contributor. ― Ed.