STANFORD – To read the international press, one would think that the last two years have been good ones for Russian President Vladimir Putin. His campaign in Ukraine has largely achieved its main goals; Russia has wrested control of Crimea and destabilized large portions of the rest of the country. Plunging oil prices may have wreaked havoc on Russia’s finances, but so far Putin’s popularity seems unaffected.
But a long stream of little-remarked-upon legal defeats could have a dramatic impact on Putin’s fortunes. In 2014, for example, the European Court of Human Rights (ECHR) delivered 129 judgments against Russia, and in January, the Council of Europe deprived Russia of its voting rights for its violations of international law. As the rulings pile up, they are starting to pose a threat to Russia’s international standing, its financial health, and Putin himself.
The rulings have not been merely symbolic. In July 2014, the Permanent Court for Arbitration in The Hague ordered Russia to pay $50 billion to former shareholders of the oil company Yukos for having illegally bankrupted the firm and distributed its assets to Rosneft, a state-owned producer. At its peak in 2003, Yukos was valued at $30 billion. The judgment is the largest ever awarded by the arbitration court, and it cannot be appealed. France and Belgium have begun seizing Russian assets to enforce the judgment.
In a separate case, in June 2014 the ECHR ordered Russia to pay Yukos’s shareholders more than $2 billion “in respect of pecuniary damage.” This judgment was also the largest in that court’s history. Russia, which is in the midst of a liquidity crisis, will struggle to raise such huge sums; failure to comply, however, would jeopardize future foreign investments.