Ukraine Backers Make Last-Ditch Effort to Seize Russian Assets

There is vigorous movement afoot, in the weeks before U.S. President-elect Donald Trump graces the White House again, to seize the entirety of Russia’s frozen overseas assets and use that $300 billion to help Ukraine. 

Europe’s new foreign-policy chief, former Estonian Prime Minister Kaja Kallas, recently advocated exactly that. Other luminaries have echoed that call, including Garry Kasparov, former world chess champion-cum-Russian gadfly; Bill Browder, the godfather of Russia sanctions; and very important people in the Nordic countries.

Since Russia is on the hook for nearly half a trillion dollars of war damage, the very least the West can do, they argue, is pocket a down payment—forcibly or otherwise.

The West froze about half of Russia’s overseas assets in the days immediately following its February 2022 invasion of Ukraine. Some voices call for the United States to seize what Russian assets it has, but what it has in hand is middling to poor. Most of the assets are in Europe, and they total somewhere close to $300 billion. But for 2.5 years, they have just been frozen, not seized. 

With an incoming U.S. administration seemingly inimical to continued support for Ukraine, and the pipeline of Western financial and military aid apparently threatened, there is a rousing chorus that is calling for the outright seizure of the entirety of Russia’s overseas hoard to be used in the service of defending Ukraine’s remaining integrity and sovereignty.

“Now is indeed the time—although sooner would have been better—to tap the over $300 billion principal in immobilized Russian Central Bank reserves and disburse that entire sum to Ukraine,” said Laurence Tribe, a professor at Harvard Law School who has been all over this issue. With Trump in office, Ukraine’s fate uncertain, and Russian President Vladimir Putin perched atop a trembling economic and financial house of cards, now is the time to strike, he said.

“An infusion of upwards of one-third of a trillion dollars right now could make a huge difference,” Tribe said.

When it comes to seizing, not just freezing, Russia’s reserves, several aspects come into play. There are the politics, timing, morality, and legality.

The legality is not actually that complicated, though there are plenty of people with their foot on the brake. Under the doctrine of countermeasures, states do have a right to bigfoot some aspects of international law—such as grabbing a sovereign state’s central bank reserves—when the crimes are egregious enough. 

There was little legal tut-tutting about the Western freeze on Russia’s overseas assets, and seizure on the same grounds is not unjustified. (Russia, in response, has threatened to steal even more Western assets than it already has in the last two years, which was already a rich haul.)

Yet there are plenty of experts who caution against trampling either international law or Russian sensibilities. Not for nothing have European, Canadian, American, and British efforts to tap Russian riches been restrained by legal experts inside national bureaucracies.

“I think a really good argument for Europe to do this is that they will be on the hook for financing Ukraine later,” said Charles Lichfield, an expert on geoeconomics at the Atlantic Council. “On the other hand, if Europe was going to do this, they would have already done it.”

The morality is not that complicated, either. Russian troops’ brutal actions in Bucha and Mariupol—not to mention the Ukrainian children Russia has kidnapped or the war crimes otherwise—already make that case. Russia’s aerial offensive, which was meant to destroy Ukraine’s power and heating, is just another point for the prosecution.

There remain, though, the technicalities. For now, the West has skimmed the cream of Russia’s overseas assets by turning the interest earned on those vast amounts, which are mostly held in European central banks and especially in Belgium’s Euroclear, into a short-term lifeline for Ukraine. The power of compound interest means that Russia’s immobilized assets are underwriting, as of this fall, a $50 billion loan—$20 billion of which comes from the United States—to keep Kyiv functional. (This was a rare muscular move from the Biden administration, and one that Tribe wholly applauds.)

“The solution—the very simple solution—is to go beyond the interest on the $300 billion and confiscate the $300 billion. That solves the problem. If that money is available for the defense of Ukraine, then it doesn’t matter whether America cuts off funding and military aid to Ukraine,” said Bill Browder, an investor, critic of the Putin regime, and draftsman of some of the West’s most searching sanctions on Moscow.

But if the West grabs the whole shebang, there won’t be any interest to back the loan—unless they park it in Ukraine, for instance. Timothy Ash, an economist, said that the full Russian reserves could perfectly well service the loan debt, if invested and vesting. If Ukraine has access to all the Russian assets, there is no hurdle to the United States and Europe “being paid back in full with these underlying assets,” he said.

So that leaves the West with one other nagging concern: Could weaponizing financial reserves, even against the worst of the worst, somehow weaken the strong hold that the U.S. dollar, the euro, and the Swiss franc still have on the global financial system? BRICS countries are trying to find alternatives to the dollar; countries such as China and Saudi Arabia, which have been happy to trade with the West and supply its energy needs in exchange for dollars for so many decades, may decide that their business is best served elsewhere. But where?

“The argument that releasing this treasure trove of sovereign funds would undercut the reserve appeal of either the U.S. dollar or the euro is utterly baseless,” said Tribe, adding that China, Saudi Arabia, and other countries that specialize in recycling vast sums of money in different jurisdictions would have jumped at the first freeze, if not the later tapping of Russian assets. 

“Having dipped our toes in the Rubicon, we might as well cross it,” Tribe said.

FP’s Rishi Iyengar contributed reporting for this story.