Is It Time to Transfer Frozen Russian Assets to Ukraine? Calls Grow Louder.

 

Is It Time to Transfer Frozen Russian Assets to Ukraine? Calls Grow Louder.

 

President Trump’s threat to abandon Ukraine added urgency to plans to fund security or reconstruction with the roughly $300 billion owned by Russia’s central bank.

 

Patricia Cohen

By Patricia Cohen

Patricia Cohen has covered the efforts to financially isolate Russia since the start of the war on Ukraine. She reported from London.

https://www.nytimes.com/2025/03/04/business/russia-assets-ukraine-trump.html

March 4, 2025

Updated 1:27 a.m. ET

 

President Trump’s rancorous threat to abandon Ukraine is stoking support for a long-debated proposal to use billions of dollars in frozen Russian assets to buy weapons for Ukraine and finance its reconstruction.

 

The money — roughly $300 billion owned by Russia’s central bank — was frozen by the United States, the European Union, Britain and others after Russia invaded Ukraine in February 2022. The aim was to punish President Vladimir V. Putin for his unprovoked attack and to cut off funds he could use to wage war.

 

As the war grinds on into its fourth year, a growing number of officials in Europe and elsewhere have been calling for the money to be released to directly compensate Ukraine.

 

The idea has picked up momentum recently, as President Trump vowed to quickly broker a deal to end the war while threatening to slash U.S. aid to Ukraine.

 

“Enough talking, it’s time to act!” Donald Tusk, the prime minister of Poland, posted on X last month. “Let’s finance our aid for Ukraine from the Russian frozen assets.”

 

Estonia, Lithuania and Latvia have joined the call. “The time is ripe now to take the next step,” Margus Tsahkna, the foreign minister of Estonia, said last month, after submitting a discussion paper on the subject to the European Union.

 

Philip D. Zelikow, a senior fellow at the Hoover Institution at Stanford and a former diplomat who has been studying how to transfer the assets to Ukraine, said, “This issue is now front and center.”

 

He pointed out that American banks held only a small fraction of the frozen assets. The bulk of the funds — about $250 billion — are in financial institutions in the European Union, Canada, Britain, Australia, Japan and Singapore, according to an analysis by Mr. Zelikow. That means a bloc of nations could move to use them even if the United States did not go along with the plan, he said.

 

After the invasion, the United States, Europe and other allies quickly took advantage of their dominance of the global financial system and froze Russian assets held by their financial institutions. Later, the industrialized democracies that make up the Group of 7 pledged to hold on to the funds “until Russia pays for the damage it has caused to Ukraine.”

 

The latest estimate to repair that damage is $524 billion over 10 years, according to an update released last week by the World Bank.

 

Whether to turn over the Kremlin’s money to Ukraine instead of just barring Russia’s access to it, though, has remained contentious. Legal experts and government officials — including some who worked for President Joseph R. Biden Jr. — warned that confiscating the money could violate international law and undermine confidence in Western financial institutions. And there was concern that American and European assets held in other countries might be more at risk in the future if a dispute arose.

 

France, Belgium and Germany have resisted the idea in the past.

 

When President Emmanuel Macron of France visited the White House last month, he reiterated that Russia’s assets “are not our belongings, so they are frozen.” And Belgium, which is holding the biggest single chunk of Russian money, for instance, is worried about the potentially damaging legal and financial fallout of transferring the funds to Ukraine.

 

Last week, Rishi Sunak, a member of the British Parliament and the former prime minister, weighed in on behalf of a full transfer. “We must find ways to get more resources to Ukraine,” he wrote in an essay published in The Economist, arguing that frozen Russian assets should be used to rebuild Ukraine and establish armed forces that can deter Russia.

 

“Once transferred to Ukraine, this money can be used to ensure that the country cannot only recover from the war, but also prevent a repeat of it.”

 

The disastrous meeting on Friday during which Mr. Trump scolded President Volodymyr Zelensky of Ukraine only underscored the urgent need for Kyiv to find new sources of funding, experts said.

 

Before the blowup, Mr. Trump was pushing Mr. Zelensky to sign a minerals deal that would have established a Reconstruction Investment Fund jointly owned by Ukraine and the United States. Some of the money that could eventually be earned from the development of government-owned mineral, oil and gas deposits was earmarked for the fund.

 

Now that Mr. Trump is threatening to withdraw all aid for Ukraine, while not assuring the country’s security from Russian aggression, the scramble in Europe to figure out ways to increase support for Ukraine has intensified.

 

This past weekend, Prime Minister Keir Starmer of Britain and Mr. Zelensky agreed to a $2.8 billion loan for Ukrainian military equipment that would be paid back using profits from the frozen Russian assets. On Thursday, leaders of European Union nations are set to meet in Brussels for a special summit on defense and Ukraine.

 

The United States has “zero desire to give any money,” said Tymofiy Mylovanov, president of the Kyiv School of Economics and a former Ukrainian economic minister. “At the end of the day, Russian assets will be used one way or another,” he said, because there are few other options. If the war drags on, they will be used to buy weapons, he said; and if it ends soon, then for reconstruction.

 

Several legal experts and former government officials, including Lawrence H. Summers, a former Treasury secretary; Robert B. Zoellick, a former president of the World Bank and U.S. trade representative; and Laurence Tribe, a law professor at Harvard, have argued that both the legal and financial hurdles of transferring the Russian funds to Ukraine could be overcome.

 

Then there is Mr. Trump’s unpredictability. Even if the minerals deal is resuscitated, there is still the issue of security for Ukraine.

 

No one is going to invest in Ukraine until a peace deal is signed and security guarantees are in place, said Ryan O’Keeffe, a managing director and communications executive at BlackRock. The financial firm previously advised Ukraine on how to set up a development fund, but while investors have made pledges, none have yet put up money.

 

Jeanna Smialek contributed reporting from Brussels.

 

Patricia Cohen writes about global economics and is based in London. More about Patricia Cohen