Confiscation on hold: why the process of transferring Russian assets to Ukraine has slowed down

On 7 July, everyone was expecting Donald Trump to address Russia. Rumors ranged from announcing long-range weapons for Ukraine to imposing "secondary sanctions" on Moscow.

Among them was that Trump would announce a decision to seize $6 billion in sovereign Russian assets frozen in the United States.

Although this is only a small fraction of the total amount of frozen assets, which together amount to about $300 billion, such a move by the US president could serve as a kind of icebreaker and a signal to other states that control these assets.

However, neither of these expectations has come true so far.

While the remaining versions can still be hoped for implementation after the end of Trump's 50-day ultimatum, the general situation regarding the future of frozen Russian assets articulates the deadlockin which this topic has now found itself, having become a hostage to negotiations in Istanbul, hesitation in Brussels, and silence in Washington.

Istanbul positions

Although the contacts between Ukraine and Russia taking place in Istanbul since May can hardly be called full-fledged negotiations, they do provide an opportunity to document the current positions of both parties.

Documents allegedly representing memoranda from both sides were published by media; however, neither side has officially confirmed their authenticity.

Russia's position is predictably ultimatum-like: a "renunciation of mutual claims related to damages caused during the hostilities." This wording, combined with a demand for the unconditional lifting of sanctions, is clearly intended to remove the issue of reparations and confiscated assets from the agenda and ensure their return to Russia.

Ukraine’s proposals – particularly regarding compensation for losses – appear far more realistic and reasonable. Kyiv suggests that frozen Russian assets either "be used for the restoration of Ukraine or remain blocked until reparations are paid."

Although this formulation might appear to be a concession, it serves two key purposes: to highlight Russia’s unwillingness to engage in meaningful discussions about compensation, and to support the EU and G7 position, which consistently emphasises that "Russia’s sovereign assets will remain frozen until it compensates Ukraine for the damage it has caused."

Ultimately, Ukrainian diplomacy aims to expose Russia’s unwillingness to voluntarily pay reparations and, in doing so, to encourage Ukraine’s allies to move forward with confiscating the reserves of the Russian Central Bank.

However, as the recent Ukraine Recovery Conference 2025, demonstrated, we are still far from a decisive breakthrough on this issue.

Rome discussions

"The damage caused by Russia amounts to at least 500 billion euros. Russia should pay for it – and until it does, Russia should not and will not have access to its frozen assets," said German Chancellor Friedrich Merz during the Rome Conference.

This statement once again confirms the status quo: for the EU – under whose jurisdiction over $200 billion in Russian sovereign assets remain frozen – confiscation is still viewed as a last resort and an undesirable measure.

Despite this, Ukraine continues to count on these funds, particularly as a key source of financing for reconstruction.

Former Prime Minister Denys Shmyhal, in his remarks at the same conference, announced the establishment of a $460 billion "Ukraine Fund," intended to be financed through confiscated Russian assets and a special tax on the export of Russian raw materials.

The latter idea essentially replicates the mechanism of the special levy applied to Iraq’s oil exports, which was used to finance reparations for the invasion and occupation of Kuwait in 1990–1991.

However, unlike Iraq, whose government voluntarily accepted and fulfilled these obligations, a similar approach is highly unlikely in the case of Russia.

At the same time, Shmyhal’s statement suggests that alternative models of reparations involving Russia are currently being discussed – reflecting an understanding of the considerable challenges surrounding asset confiscation.

Nonetheless, the issue of confiscation remains far from being resolved.

A new window of opportunity

As the 50-day ultimatum Donald Trump issued to Vladimir Putin will near to its end, discussions surrounding the potential seizure of Russian assets could intensify.

The Telegraph previously reported that the issue was set to be raised at an informal meeting of the EU Foreign Affairs Council (FAC) in late August, although the relevant passage was later removed from the article.

In the new reality – where the US supplies weapons to Ukraine at the expense of European budgets – the idea of asset seizure has become even more appealing.

"Should it be a burden shouldered by our taxpayers or the Russians?"

Polish Foreign Minister Radosław Sikorski asked rhetorically.

A similar view is held in Kyiv. During a meeting with US President Special Envoy Keith Kellogg, current Secretary of the National Security and Defense Council Rustem Umerov discussed the possibility of financing joint defense projects using frozen Russian assets.

Despite the absence of concrete decisions, any shift in the military-political context could accelerate progress. Notably, on 9 July, just ahead of the Rome Conference, the European Parliament adopted a resolution calling for the confiscation of these assets, indicating broad political support for such a measure.

Nevertheless, adopting this step requires clear political will from the leaders of allied nations.

In recent months, Ukraine has explored various models for utilising frozen Russian assets and financing reparations, recognising that full-scale confiscation remains a long-term objective.

Alongside the proposal voiced by Denys Shmyhal, Deputy Head of the Presidential Office Iryna Mudra recently suggested the creation of a fund into which the reserves of the Russian Central Bank could be transferred. This fund would be managed professionally to maximise returns for Ukraine.

In any scenario, the first step is to strike a balance between Ukraine’s interests and those of its allies, who may prefer to use the assets or proceeds in ways that also benefit their own economies, including through contracts with their defence industry sectors.

Whether such a compromise would truly serve Ukraine’s best interests remains an open question.

What is certain, however, is that Kyiv must be prepared for a range of scenarios when the window of opportunity for confiscation opens.

Given the unpredictability of global developments, that moment may come and it may come unexpectedly.

Ivan Horodyskyy,
Director of the Dnistrianskyi Centre, lawyer

This material was prepared with the support of the International Renaissance Foundation as part of the project "#Compensation4UA / Compensation for War Damages to Ukraine. Phase V: Interim Reparations for Victims of Russian Aggression against Ukraine – Exploring Approaches, Needs and Solutions."