Since Russia's full-scale invasion of Ukraine in February 2022, Western governments have frozen approximately $300 billion in Russian central bank reserves. Under customary international law, Russia bears a legal obligation to compensate Ukraine for the destruction it has caused, yet Russia has never voluntarily paid reparations in its history of illegal aggression.
The case for redirecting these assets is not merely moral. It is grounded in decades of legal precedent, including post-WWII reparations frameworks and more recent uses of frozen assets in cases like Iraq. The standard objections (sovereign immunity, financial-stability risk, risk of retaliation) do not withstand serious scrutiny.
In December 2025, the EU enacted legislation indefinitely immobilising Russian state assets until Russia ends its war and pays reparations, and agreed to a €90 billion loan for Ukraine through 2027. No decision has been made on the use of the principal of the frozen assets. Current windfall-profits mechanisms generate only c. €3 billion annually, insufficient to meet Ukraine's needs or provide meaningful accountability. The €90 billion loan will have been depleted by 2027, after which Ukraine will again face critical funding shortfalls without a sustainable solution.
The G7's Extraordinary Revenue Acceleration (ERA) loan and windfall-profits mechanisms represent meaningful steps towards using the assets, but neither addresses the underlying funding gap. Ukraine's recovery needs far exceed what these instruments can deliver.
Beyond the legal case, there are strong strategic considerations about the effects of action and inaction on European security, deterrence, and the international rules-based order.
Russia has shown willingness to absorb substantial economic costs in pursuit of its war objectives. There is no evidence, across multiple rounds of negotiations over four years, that the frozen assets have functioned as an inducement toward settlement. Russia's priority is denying Ukraine access to these funds, not recovering them. The stronger deterrent signal is demonstrated willingness to convert RSA into concrete support.
Maintaining the current framework leaves Ukraine dependent on donor-fatigue-prone voluntary contributions, shifts costs to taxpayers in holding jurisdictions, and signals that political hesitation can outlast accountability commitments. Delay also erodes the credibility of the collective immobilisation regime itself.
Funds directed to Ukraine's defense support joint development with European industry. Recovery funding prevents prolonged instability and displacement, both of which carry long-term fiscal and political costs for European states. Reconstruction will generate significant economic opportunities for European firms across defense, energy, infrastructure, and finance.
Keeping vast sanctioned-state assets in European financial institutions exposes those institutions and host states to legal risk and ongoing Russian hybrid threats aimed at coercion.
Material accountability for aggression is a necessary condition of durable peace, not a consequence of it.
A peace agreement that leaves Russia's reparations obligation unaddressed does not resolve the underlying breach of international law; it defers it. Under international law, reparation is not a condition Russia must accept as part of a negotiated settlement; it is an obligation that already exists, established by Russia's aggression.
Rebuilding Ukraine through donor contributions while Russia retains assets it is legally obligated to transfer shifts those costs onto Ukraine and its supporters.
The international compensation architecture (including the International Claims Commission) was built to process and enforce exactly this obligation. Frozen Russian assets are its designated funding source.
Holding assets in indefinite reserve while Ukraine's reconstruction needs compound does not fulfill the accountability commitment; it postpones it.
A structured approach would proceed in four stages, moving from the current dispersed-immobilisation framework toward a purpose-built international mechanism. Broad jurisdictional participation (including the EU, UK, Switzerland, Canada, Japan, Australia, and the US) strengthens the collective-countermeasures rationale and reduces litigation risk for individual states.
All relevant jurisdictions identify, disclose, and segregate Russian state assets into designated accounts. This reduces systemic risk and creates the operational foundation for subsequent steps without altering ownership of the funds.
Participating states establish a multinational trust or comparable mechanism with clear governance, professional asset management, and full transparency. This structure moves the assets beyond the reach of Russia's recovery demands even if individual sanctions regimes lapse, and enables active portfolio management rather than passive cash-holding.
The framework includes full indemnification for Belgium and other holding states, a litigation reserve, and explicit legal firewalls for implementing institutions. Liability and operational burdens are shared collectively rather than concentrated in a single jurisdiction.
Participating states coordinate the gradual transfer of RSA into the structure, preserving servicing of existing ERA commitments. Assets are directed to Ukraine's defense, urgent recovery, reconstruction, and compensation through the International Claims Commission and related mechanisms.
Neither segregation nor transfer to a trust alters ownership of the funds and thus does not raise issues of seizure or confiscation under most legal frameworks. These steps implement (rather than extend) the existing countermeasure, by applying the assets to Russia's established reparations obligation.