The G7 nations are considering using nearly $300 billion in frozen Russian financial assets to support Ukraine in the midst of the ongoing conflict. However, the process of how to utilize these assets is proving to be complex and controversial.
One proposal is to seize the immobilized Russian reserves in their entirety and allocate them to Ukraine. This idea is supported by some legal experts who argue it can be done under the doctrine of international law known as “countermeasures.” The assets would then be sold or collateralized, with the proceeds going to Ukraine or a dedicated reconstruction fund.
European officials, on the other hand, have raised concerns that this approach could violate international law and lead to legal challenges from Russia. Previous examples of such seizures occurred after wars had ended, not during active conflicts like the current situation in Ukraine.
Another suggestion is to ringfence the profits from the Russian assets for Ukraine, with estimates suggesting it could amount to 15-20 billion euros by 2027. The European Commission has proposed that 90% of the proceeds go towards a fund for military aid for Ukraine, with the remaining 10% supporting other needs in Kyiv.
To navigate the legal complexities, some experts have proposed issuing “reparation bonds” that would pay out only if Ukraine receives compensation from Russia for damages incurred during the war. This approach could provide a way for Ukraine to collect on any damages awarded, up to the value of the frozen reserves.
The G7 leaders are expected to discuss and potentially make a decision on how to handle the frozen assets at their annual summit in Italy in June. The goal is to find a solution that supports Ukraine while navigating the legal and logistical challenges involved in accessing the Russian assets.