Chairmanship of the Commission on Security and Cooperation in Europe

Two U.S. lawmakers heading up an independent U.S. government human rights watchdog have introduced a resolution that calls on President Joe Biden to boot Russia from the United Nations Security Council, just days before the Kremlin’s flagging full-scale invasion of Ukraine is set to hit its 10-month mark.  The bipartisan Helsinki Commission, which called on U.S. Secretary of State Antony Blinken to protest Russia’s standing as a permanent Security Council member in October, wants Congress to argue that Russia’s war has violated the “purposes and principles of the United Nations” and asks U.S. government agencies to take steps to limit Russia’s privileges at the U.N., though it gives the administration some free rein to determine how it might act.   In the congressional resolution shared with Foreign Policy, Reps. Steve Cohen and Joe Wilson said that Russia had committed “flagrant violations” of the U.N. Charter that call into question its right to hold a Security Council seat, including the illegal annexation vote in four Ukrainian oblasts, the perpetration of atrocities in Ukrainian cities such as Bucha, nuclear saber-rattling, and creating risks to the world’s food supply.  Ukraine has also advocated for Russia to be removed from the council, though experts remain skeptical that such efforts will work. The U.N.’s governing charter doesn’t contain any provisions for removing a permanent member of the Security Council. While countries can be removed from the United Nations altogether, doing so would require a two-thirds majority vote in the General Assembly, including the consent of the council itself. “Russia would have to agree to it, and it’s just not going to happen,” said Louis Charbonneau, U.N. director with Human Rights Watch. China is also unlikely to agree to such a precedent.  Though House resolutions are not binding law, the move solidifies thinking both on Capitol Hill and within the Biden administration about how to curb Russian influence in Turtle Bay. The resolution pushes forward a previous effort from the Helsinki Commission—which was created in 1975 as part of a U.S. law that solidified the brief detente between the United States and the Soviet Union—calling on the State Department to initiate a process to strip Russia’s seat on the top U.N. body. One idea, backed by the commission as well as some legal scholars, seeks to challenge Russia’s status as the heir of the Soviet Union’s seat at the Security Council. As one of the initial signatories of the treaty that founded the Soviet Union, alongside Russia and Belarus, Kyiv could make a convincing claim to be the only successor state of the Soviet Union not to have flagrantly violated the principles of the U.N. Charter and issue credentials for one of its own diplomats to take the seat. As deciding on credentials is a procedural matter, it would only require nine of the 15 members of the council to vote in support of Ukraine, Thomas Grant, a senior research fellow at the University of Cambridge, has noted.  The feasibility of such a plan remains a subject of debate. And three decades after Russia took over the Soviet Union’s seat, challenging such precedent could also prove to be an uphill battle. “You’re looking at three decades of recognition of Russia in this place,” Charbonneau said.  But Russia’s long-standing intransigence, along with the full-scale invasion of Ukraine, has gotten both the United States and Ukraine to begin thinking about alternatives to diminish Moscow’s influence. Speaking at the U.N. General Assembly in September, Biden called for reforms of the Security Council, including the possibility of adding more permanent and nonpermanent members, such as for countries in Africa, Latin America, and the Caribbean. The United States also succeeded on Wednesday in ousting Iran from a United Nations panel on women’s rights.

A U.S. Army veteran who independently and voluntarily fought in Ukraine warned on Thursday that the hardest days of fighting the war are still to come, as the Russian military tightens its control over territory in the eastern part of the country.  Retired U.S. Army Staff Sgt. James Vasquez, who has returned from combat in the country but plans to go back, told the congressional Helsinki Commission during a briefing that while the Ukrainian military is better off now with increased foreign support, the most difficult fighting lay ahead for soldiers. “We have much more support now, and we have the weapons and gear that we need to be able to fight properly,” Vasquez said to the panel. “The fight’s harder than it was when I left. And that was hard fighting when I left.”  Vasquez shared moving and oftentimes difficult details of his time in Ukraine at the hearing, alongside retired U.S. Marine Corps Lt. Col. Rip Rawlings, who is providing logistical support to the Ukrainian military through he and Vasquez’ foundation, Ripley’s Heroes. Vasquez, who has gained a social media following through the videos he shares from the battle’s front lines, said he has “pretty much sold everything I owned” so he can return to the fight in Ukraine. Vasquez explained the evolution of Ukrainian combatants that he witnessed, saying when he arrived the soldiers were fighting “primitively” but then saw them turn into battle-tested warriors. “I was fighting with guys who had a red T-shirt on and sneakers,” said Vasquez. “We were going into battle with white Toyota Camrys with Javelin (missiles) in the back.” But as the fighters have grown more sophisticated, and weapons and gear has rolled in from other countries, Vasquez and Rawlings both warned that the fighting situation was fragile and said Ukraine needs continued support from allies. “We need more, they need more (weapons),” Rawlings said. “We are at a very tenuous and fragile point. This war could go in any direction, very unfortunately.” Rawlings also urged lawmakers to amend export controls that do not allow Americans to send certain military equipment, including certain body armor, to Ukraine. “It is the largest single obstacle that we face,” Rawlings said. “The biggest issue that we have is that a U.S. citizen can go purchase a set of level three body armor, but you cannot purchase it and give it to a Ukrainian.” Rep. Joe Wilson (R-S.C.) lauded the veterans for their decision to volunteer in the Ukrainian conflict at the briefing.  “Foreign fighters have actually come in to heroically volunteer and are enduring intense combat conditions and witnessing the gross human rights violations perpetrated by (Vladimir) Putin.”

A bipartisan group of U.S. lawmakers introduced a resolution characterizing Russia’s actions in Ukraine as an act of genocide on Friday.  A draft of the resolution, seen by Foreign Policy, argues that atrocities committed by Russian troops in Ukraine, including indiscriminate attacks on civilians, the direct targeting of maternity hospitals and medical facilities, and the forcible transfer of hundreds of thousands of Ukrainians to Russia and Russian-held territory meet the criteria laid out in Article II of the United Nations Convention on the Prevention and Punishment of the Crime of Genocide.  Congressional resolutions are commonly used by lawmakers to express strongly held sentiments by members of the House of Representatives or Senate. Although the resolution is not legally binding, it sends a strong message of condemnation of Russia’s actions and indicates ongoing efforts by members of Congress to provide continued support to Ukraine beyond military aid.  In April, U.S. President Joe Biden characterized Russian atrocities in Ukraine as an act of genocide. “We’ll let the lawyers decide internationally whether or not it qualifies, but it sure seems that way to me,” he said, speaking to reporters in Iowa. Biden’s remarks were echoed by the Canadian and British prime ministers while French President Emmanuel Macron and German Chancellor Olaf Scholz declined to use the term, underscoring long-standing differences within the international community as to what constitutes genocide.  As a crime, genocide is distinct from other mass atrocities, and it is defined in the United Nation Genocide Convention as “acts committed with the intent to destroy, in whole or in part, a national, ethnic, racial or religious group.” Since 1989, the U.S. State Department has recognized eight genocides, most recently declaring attacks on the Rohingya Muslims in Myanmar as genocide. U.S. designations of genocide can take years of gathering and analyzing evidence, and senior Biden administration officials noted that the president’s remarks in April did not constitute a formal U.S. policy shift. Arguing that events in Ukraine could constitute genocide, the resolution points to statements made in Russian state media and by senior officials, including by Russian President Vladimir Putin, that undermine Ukrainian statehood and sovereignty; the congressional resolution alleges that the atrocities were carried out with a specific purpose. Proving that the crimes are carried out with deliberate genocidal intent can often be difficult to prove in law.  A number of Russian soldiers and units—which were accused of committing war crimes in the Kyiv suburb of Bucha, specifically torture, rape, and summary executions of civilians—were awarded in April by Putin, who designated the 64th Motor Rifle Brigade as Guards and praised them for their “mass heroism and valor, tenacity, and courage.” The resolution is set to be introduced by Democratic Rep. Steve Cohen and is expected to be co-sponsored by a bipartisan group of House members who sit on the Helsinki Commission, an independent U.S. government agency tasked with promoting human rights and security in Europe. In April, the commission wrote to the president of the Parliamentary Assembly of the Organization for Security and Cooperation in Europe to endorse a declaration passed by the Ukrainian parliament characterizing Russia’s actions as genocide and urging the assembly to pass a similar resolution.

January used to be a big month for Swiss bankers and their Russian clients. Many of the Moscow elite had made a tradition of coming to the Alps for the orthodox new year, skiing with their families, then catching up with their financial consiglieri. In St Moritz, one banker recalls how he would book blocks of rooms for his clients. He would entertain them with snow polo, rolling out the charm as they clinked champagne glasses and watched horses charge across a frozen lake. This year he couldn’t tempt a single one. For the best part of a decade, Russian money has coursed through the Swiss banking world. But, as Russia’s relationship with the west has soured in recent years, what was once a source of bumper new profits for Switzerland’s banks has become a financial and reputational risk. In the run-up to Russia’s invasion of Ukraine in February, many wealthy Russians were moving to better safeguard their money from political interference, putting assets in the names of relatives or shifting them to less closely scrutinised jurisdictions, such as Dubai. In its wake, a vast sanitisation operation is under way at Swiss banks, to try and wind down relationships with sanctioned individuals. Neutral Switzerland has matched all of the EU’s punitive financial measures against Russia. More than 1,100 of the Russian elite — including figures such as coal and fertiliser billionaire Andrey Melnichenko and banker Petr Aven, both regular visitors to Switzerland — have become financial personae non gratae in a country many had assumed would keep their fortunes safe. The biggest banks, such as the publicly listed trio of UBS, Credit Suisse and Julius Baer, have declared they will cease all new business in Russia. For critics, though these are weasel words. It is their existing Russian clients that are the problem. No one is expecting many new fortunes to be minted in Russia any time soon. “Switzerland has a terrible history when it comes to Russian dirty money,” says Bill Browder, a longstanding Kremlin critic and a former Russian investor. He is sceptical of how much commitment there is among Swiss bankers to enforcing sanctions. “The Swiss want to be seen as doing something, but they don’t actually want to do anything,” he says. The US Helsinki Commission, an independent US government agency that observes human rights and the rule of law in Europe, agrees. In a report issued in May, it labelled the alpine state and its banks “a leading enabler of Vladimir Putin and his cronies”. The Swiss government responded by calling US secretary of state Antony Blinken in protest. A spokesperson for the Swiss government said president Ignazio Cassis “rejected the [report] in the strongest possible terms”. Like their counterpart in St Moritz, Swiss bankers the FT interviewed for this story all declined to be identified. Many more refused to speak at all. Switzerland’s banking secrecy laws are draconian — talking about clients can earn a lengthy jail term — and talking about Russian clients is even more taboo. “When we were onboarding a lot of these clients [in the 2000s], the entire approach was just very different. And you can’t really say that publicly now,” says one former banker who handled eastern European and Russian clients until retiring two years ago. “These [Russians] were people who had earned so much money, so quickly, that they didn’t know what to do with it. They were basically ideal clients. As long as you had no questions about where that money had come from . . . and, basically, we didn’t.” Quite how much Russian money there is in Switzerland is open to question. In March, the industry body representing Switzerland’s banks, the Swiss Bankers Association (SBA), caused a stir when it released details of a study estimating there was SFr150bn-SFr200bn ($154bn-$205bn) held in accounts for Russian citizens. At the end of last year, the total cash held on behalf of customers by Switzerland’s banks was SFr7,879bn, more half of which was wealth from abroad, according to the SBA. The disclosure prompted hand-wringing in the Swiss media. Commentators, even at conservative outlets such as the newspaper Neue Zürcher Zeitung, asked whether Switzerland should do business with autocratic regimes anywhere in the world any more. But others in the country have defended its economic relationships with Russia. The outspoken finance director of the canton of Zug, an important low-tax centre, said in March it was not his job to “act like a detective” and make judgments on Russian assets. In April, he announced that Zug, home to 37,000 companies, had no sanctioned assets to report back to Bern. Nevertheless, by April, the State Secretariat for Economic Affairs (SECO) announced that it had frozen SFr9.7bn of Russian assets. Authorities have insisted that the amount is proportionate to the scale of asset freezes in other leading financial centres. But Bern has been forced to row back in some cases, and in May it announced it was unfreezing SFr3.4bn of funds. Switzerland cannot freeze funds “without sufficient grounds”, says Erwin Bollinger, a SECO official, who adds that the government has received data on sanctioned accounts at more than 70 of the country’s banks. Direct disclosure by the banks has been patchy. Credit Suisse chief executive Thomas Gottstein told a conference in March that about 4 per cent of assets in his bank’s core wealth management business were Russian — a proportion that would equate to roughly SFr33bn. Meanwhile, UBS, the world’s largest private wealth manager, has disclosed it has $22bn of assets of “Russian persons not entitled to residency in the European Economic Area or Switzerland”, leaving open the question of how much it holds overall. Some 16,500 Russians are permanently resident in Switzerland, and more Russians are accepted for Swiss citizenship than any other nationality, according to the State Secretariat for Migration. Julius Baer has made no direct disclosure of the size or wealth of its Russian client base, though it has said, somewhat elliptically, that the value of assets held by its Moscow-based subsidiary is some SFr400mn. Information from the dozens of other smaller Swiss private banks is even scantier. Even leading industry figures wonder what is being left unsaid. One executive, who for the past two decades has been a senior figure in the private banking world in Switzerland, says he has almost no doubt that the significance of many banks’ close working relationships with sanctioned individuals is being underplayed. “You don’t have dozens and dozens of people employed on your Russia desks if you are not making money in Russia,” he says. Moreover, he adds, many Russian clients have done their business through Swiss banks’ subsidiaries abroad, such as those in Monaco, London or Asia. It is not clear to him whether all these assets have been caught by the Swiss rules. Swiss banks have a legal obligation to record the ultimate beneficial owners of all assets they handle worldwide, but doing so accurately can be tricky in jurisdictions where it is easy for third parties to mask who the owners are. Switzerland’s banks have moved dramatically from the freewheeling approach of previous years, when there was “a run on Russia”, says Thomas Borer, a former leading Swiss diplomat turned consultant, who has worked with prominent Russian clients. He now supports Switzerland’s sanctions policy. “Being militarily neutral does not mean being economically indifferent,” he says. But he argues that Swiss banking culture is still very different from elsewhere in the west. Even the biggest banks, he says, were clinging to relationships with Russian clients as the Ukraine crisis unfolded. The Financial Times revealed that, as late as March, Credit Suisse was asking investors to destroy documents that might expose Russian oligarchs it had done business with to legal risks. One senior relationship manager at a Zurich-based bank agrees. Even as sanctions came in, he says, the dominant approach was to ask, “how can we make this work for the client?” rather than “how do we do this for the government?”. But he defends the approach, saying: “Doing everything you can for your client is a Swiss commitment to excellence. If I was a watchmaker I would want to make the best watches with many complications. And if I was a policeman, then maybe I would want to be the best at catching Russian criminals. But I’m a banker.” There is still legal ambiguity in Switzerland over whether sanctions apply to family members and friends of listed individuals. This has provided a loophole bankers have helped at-risk clients to actively exploit in recent years. Swiss banks have seen “billions” of assets transferred to the names of spouses and children of Russian clients, in a trend that accelerated in the run-up to the war, says one banker. One bank chief executive admitted recently to the FT that there were many “grey areas” in applying sanctions. Part of the problem, he said, was that bank legal departments were struggling to obtain clarity from Bern on which asset transfers were deemed to be evading sanctions and which were not. Many who have been in the industry for a long time decry the new rules they must follow around taking new clients and being certain of the source of their wealth. “Know your customer used to mean just that: do you know the person? Now it is supposed to mean: do you know every little thing about their financial and private life?” says one Geneva-based banker. Many Russians themselves knew the banks were no longer safe havens, particularly since 2018 when Swiss banks began making significant concessions to information sharing on client accounts with other governments. Swiss residency did not protect billionaire Viktor Vekselberg in 2018, for example, when he was targeted by US sanctions; both Credit Suisse and UBS moved to terminate loans with him. The SBA says its members adhere to the highest international standards. Chief executive Jörg Gasser, argues Swiss banks have “no interest in funds of dubious origin” and have rigorous procedures in place to rapidly screen for sanctioned assets. “Swiss banks have been — and still are — very careful and diligent when it comes to accepting client funds,” he says, adding it is important to recognise the huge amount of legitimate business done with Russian entrepreneurs who are not subject to sanctions. For Mark Pieth, emeritus professor of criminal law at the University of Basel and a specialist in white-collar crime, the real story of the past decade is how Switzerland’s lawyers, rather than its bankers, have become the facilitators of hidden foreign money. “Swiss bankers were extremely cosy with Russians in the past,” he says. “Alongside London, this country was the porch for Russians into the west . . . but now I wouldn’t say the problem is so much with the banks — it is all the other intermediaries.” Swiss law gives remarkable sweep to attorney-client privilege, says Pieth, meaning lawyers can refuse to disclose almost anything to the authorities about their clients. The Swiss Bar Association strongly rejects this. “Professional secrecy does not protect against criminal acts,” it says. “Lawyers know the law and know what to do.” One senior industry figure defends the banks’ position unapologetically. He says everybody now wants to know the origins of their luxury jackets. But 10 years ago nobody was asking where they were made, by whom and with what materials. In banking, as in fashion, things have changed, he says, but nobody is haranguing the fashion world in the same way they are criticising banks. Fashion companies, though, have moved with the times and opened up, whereas Switzerland’s banks, for all their insistence on change and compliance, still want to maintain as much of the secrecy surrounding their clients as possible — even at a time of international crisis.