Webwork - 9:25 pm on Jan 21, 2009 (gmt 0)

Ian, you might want to research "forfeiture statute" for openers.

IF an entity or thing, such as a car, is used to transport illicit drugs, the State can seek the forfeiture of the car, seize it and sell it - keeping the proceeds IF it's determined that the party in question was in fact guilty.

So, forfeiture laws would be a starting point to answer the question "Can a State or nation seize property?". The answer is a definite "yes".