Why the transfer of frozen Russian assets to Ukraine is on hold again
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.
However, neither of these expectations has come true so far.
Read more about why the overall situation regarding the future of frozen Russian assets has reached a deadlock in the article by Ivan Horodysky, Dnistryanskyi Center Director: Confiscation on hold: why the process of transferring Russian assets to Ukraine has slowed down.
The memoranda exchanged between Ukraine and Russia during the Istanbul negotiations outline both sides' positions on compensation for war-related damages.
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."
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.
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 intensified.
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.
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.
"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.
Alternative models of reparations involving Russia are currently being discussed – reflecting an understanding of the considerable challenges surrounding asset confiscation.
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.
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.