The new Group of Seven (G7) plan to fund Ukraine using profits from frozen Russian assets is a “breakthrough,” but Ukraine’s goal is still to seize the full worth of the assets, said experts speaking at a panel event in Kyiv discussing Russian asset seizure on June 17.
“This money will obviously help Ukraine survive,” said Andrii Mikheiev, an international law and anti-corruption expert at the advocacy NGO International Center for Ukrainian Victory.
“But as for justice and as for reconstruction, I don't think we're talking about an amount of money that would be enough.”
The G7 leaders confirmed on June 13 a plan to provide Ukraine with a $50 billion loan by the end of the year, repaid using interest from approximately $300 billion of Russian Central Bank assets frozen after the invasion in 2022.
The bank’s assets are tied up in foreign bank accounts in local currencies, gold, bank deposits, and securities like bonds and stocks. The vast majority are in Europe, particularly Belgium, with the Brussels-based company Euroclear holding some $192 billion in Russian assets.
The details of the agreement — including who will fund the loan and how the money will be spent — are still being finalized with little information available to the public.
In a statement released by the G7, the group noted that the loan was “without prejudice to possible other contributions,” leaving the door open to future confiscation of the assets themselves.
While the $50 billion loan will not be able to cover the $486 billion recovery costs, estimated by the World Bank, it will be able to sustain Ukraine for a year, said Yuliya Ziskina, a senior legal fellow for the nonprofit advocacy group Razom for Ukraine.
“This is an interim step, and that is not a substitute for full confiscation,” she said.
She hailed the loan as a “breakthrough” and a catalyst for further conversations. However, she noted that the plan goes out of its way to avoid touching Russian assets.
“We are moving in the right direction, but it's important to still keep our eyes on the ultimate goal,” she said.
The event, which discussed ways to confiscate Russian assets in favor of Ukraine, was hosted by the Center for Economic Strategy (CES) in coordination with the International Center for Ukrainian Victory and KI Insights. KI Insights is an analytical unit backed by the Kyiv Independent.
Kyiv suited up with international lawyers in the first weeks of the full-scale invasion in the hopes of seizing the assets quickly. But Ukraine has struggled to convince its allies to move on the issue of fully confiscating the frozen assets amid political debates.
The G7 agreement is a cohesive step forward after two years fraught with disputes between Ukraine’s allies. Lobbying from opponents as well as disagreements over what the money should be used for held up decision-making while Ukraine struggled to cover its fiscal deficit and the cost of damages rose.
France, Germany, Japan, and Italy are particularly resistant to the idea of full confiscation due to legal ramifications and a fear of catastrophic fallout in financial markets, according to the Financial Times.
Opponents warn that Moscow could seize Western assets located in Russia following threats from Kremlin spokesman Dmitry Peskov. Western companies are also worried that they will lose their business ventures and investments in Russia, according to Timothy Ash, a senior strategist at BlueBay Asset Management.
However, Washington managed to rally the four countries to back the $50 billion loan agreement. The White House has been one of the foremost proponents of Ukraine’s ambitions to fully seize Russian assets, having set the precedent with the REPO Act on April 20 that greenlit the path to confiscation in the U.S.
Panelists asserted the importance of overcoming legal hurdles to secure the full worth of the assets. They also dismissed the concerns of hesitant EU members that Russia’s sovereign immunity could result in Moscow seeking legal action after the war.
It is “well-established” in international law that assets can be legally confiscated from Russia and used to credit debts owed to Ukraine for damage, said Mykola Yurlov, deputy director of the International Cooperation and Representation Department in the Justice Ministry.
The potential economic risks of investors fleeing Europe have failed to materialize, he said. He noted that reports from the European Central Bank show a strengthening positioning for foreign investment despite ongoing debates around confiscation.
That leaves the main roadblock a “political fear of action,” by European countries, Yurlov said. He warned that the consequences of inaction could be far more disastrous than the potential effects of confiscation.
“The fear of not taking action would be the collapse of Ukraine, and our defeat in the war and then potential further encroachment of Russia,” he said.
This political fear has fallen over time, noted Bohdan Karnaukh, an analyst with the Institute of Legislative Ideas, a Ukrainian think-tank that since 2022 has been tracking global shifts in attitudes regarding the confiscation of Russian assets.
In addition to the recently announced G7 step, Karnaukh pointed to U.S. Treasury Secretary Janet Yellen, who previously raised significant legal risks about confiscation, but has since changed her stance and is calling on partners to embrace this approach.
Backing a loan with frozen assets is an “extremely positive” signal for future confiscation, said Roman Sulzhyk, a financier and member of the supervisory board of CES.
He believes that the assets will stay frozen until they are eventually confiscated and legally handed to Ukraine as reparations.
“Even if (Russian forces) collapse the front today or (former President Donald) Trump comes to power and they force (Ukraine) to sign some shameful peace agreement … they will not be able to unfreeze these assets until the people who loaned the $50 billion are actually paid (back),” he said.
