A Realistic Model For The Use of Frozen Russian Assets

As of February 2025, the total amount of frozen Russian assets worldwide is estimated at more than $300 billion. These assets include the Russian Federation’s state reserves and the property of Russian oligarchs and companies under international sanctions. 

A significant part of the frozen assets belongs to the Central Bank of Russia and to leading Russian financial institutions and corporations, such as Gazprom, Rosneft, and others. In addition, the personal assets of Russian businessmen and politicians known for their proximity to the Kremlin leadership were sanctioned. Most of these funds are placed in financial institutions in the United States, the European Union, the United Kingdom, Canada, and other countries that have imposed sanctions in response to Russia's aggressive actions. 

In 2025, the issue of managing frozen Russian assets will be at the center of international debate as much as ever. However, now, after a long period of sanctions, confiscations, and legal disputes, global players are beginning to look for new effective mechanisms for using these funds and property.

While in 2022 and 2023, the discussion was mainly about Moscow's moral responsibility and the urgent need to redirect Russian resources to rebuild Ukraine, by 2025, the discussion had become more pragmatic, even cynical. Accordingly, the ideas became more concrete, and the proposals were better calculated from an economic and political point of view.

What is the Current Mechanism for Delivering Frozen Assets to Ukraine?

In June 2024, the G7 leaders agreed to provide Ukraine with a $50 billion loan secured by the proceeds of frozen Russian sovereign assets, which total about $300 billion. This mechanism stipulates that the interest earned on the frozen assets will be used to service and repay the loan to Ukraine. It is important to note that until the loan is fully repaid and all interest is paid, the frozen assets will remain inaccessible to Russia, thus providing guarantees for creditor countries and effective support for Ukraine.

First and foremost, the most prominent players in the management of frozen assets are the United States, the European Union (and especially some of its members with a more “tough” sanctions policy, such as the Baltic states and Poland), as well as the United Kingdom and Canada. Two conventional factions have gradually emerged within these states. The first advocates a rapid and unrestricted transfer of assets to the Ukrainian government or special funds to rebuild the affected regions. This idea is based on moral and legal logic: Russia is the aggressor, so its assets can serve as compensation for damages.

The second faction advocates more moderate mechanisms. They argue that confiscation without solid legal grounds is dangerous, as it sets a precedent that can be used by any state against any other. In addition, too radical steps could undermine confidence in the international financial system, as no one would want to keep their wealth in jurisdictions where political decisions could take it away.

What is the Essence of the Discussion?

The key task in 2025 is to find a tool for managing Russian assets so that the funds work for the reconstruction of Ukraine, for the social and economic needs of people affected by the war, and at the same time, do not result in a flurry of lawsuits or provoke a massive withdrawal of investments. To this end, most Western lawyers and political consultants propose a mixed approach. It suggests that some of the assets recognized as belonging to legal entities or individuals directly involved in the aggression may be confiscated “irrevocably.”

The rest of the assets are proposed to be transferred to the operational management of a special international fund that will invest the dividends received from these assets in the restoration of the destroyed infrastructure. The logic is that legal ownership of the confiscated assets is formally “frozen,” but economic management is transferred to an independent entity. As a result, the owners cannot return the resources until a political settlement is reached and certain conditions are met (including payments on claims for damages to Ukraine or Russia's withdrawal from the occupied territories).

What is a “Revolving” Fund, and Why is it Considered as One of the Basic Scenarios?

Among the proposals that seem to be the most beneficial for all stakeholders is the “revolving fund” model. The essence of it is that the proceeds from Russian assets-dividends, interest, rent payments, etc. - are sent to support Ukraine through various channels: either by paying compensation to families who have lost their homes or by participating in projects to rebuild the transportation network, medical facilities, and schools.

This approach eliminates the need for full, immediate confiscation, reducing legal risks. At the same time, it provides a permanent resource that can be used for many years. For Ukraine, this means stable, albeit gradual, funding for critical sectors. For donor states or states with frozen assets, there is no need to give large sums of money at once and no conflict with property laws or international trading partners.

Civil-military Bonds as an Alternative Solution

Another effective way of managing is to recognize a “civil-military bond” scheme secured by frozen Russian funds, where governments or international organizations issue securities guaranteed by these assets and use the proceeds to support military support and reconstruction. Such a proposal has existed since the end of 2023 but has not yet been widely used by 2025.

The problem is that investors face a high risk. In the event of Russia's political rehabilitation or imperfect court decisions, the legal status of such bonds will become questionable. Nevertheless, some players, especially from the private sector, see this instrument as an interesting “high risk-high return” option. Speculative funds could generate significant income from such securities, but this potentially exacerbates the already complex issue of the legitimacy of using other people's assets.

Could Frozen Russian Assets Be Used to Strengthen the Ukrainian Economy?

In the discussions of 2025, the idea that the proceeds from the use or sale of Russian assets should be used not only for military or purely reconstruction needs but also for the modernization of the Ukrainian economy as a whole is becoming increasingly prominent. This is being discussed in Brussels and Washington, emphasizing that without updating the industrial base, creating high-tech sectors, and promoting exports, Ukraine is unlikely to be able to fully join the European family in the future.

Some countries, such as France and Italy, have suggested that part of the proceeds should be used for “green transformation” and climate change adaptation in the devastated regions. After all, reconstruction aimed at the past does not have a long-term effect. Still, the formation of modern infrastructure can become a “new economic miracle” for Ukraine, even if it uses Russian money.

Diverging Opinions on International Legal Grounds

However, the most pressing question is whether, from the point of view of international law and ethics, it is permissible even in 2025 to completely seize private assets that “formally” belong to Russian citizens but are not always directly related to military operations. Some representatives of business circles in Western Europe warn that mass confiscation could set a precedent for abuse in the future when similar measures are taken against other states without a clear evidence base.

That is why the approach of “differentiated” confiscation is so popularized, where each specific case is thoroughly checked: if the assets belong to structures related to the Russian defense complex or oligarchs close to the Kremlin's political decisions, they are considered legitimate targets of sanctions and future forced transfer for the reconstruction of Ukraine.

To prevent excessive politicization, major international audit firms and financial institutions—such as the World Bank the European Bank for Reconstruction and Development, and select private funds—increasingly participate in asset management, offering expertise on fund origins. On the one hand, this involvement minimizes the risk of “corrupt distribution” in the hands of individual politicians and, on the other hand, gives these financial institutions leverage.

Sometimes, there are accusations that large companies can excessively delay the process by receiving money for their services or playing on market fluctuations. However, most observers recognize that without a transparent audit, it is impossible to convince the broader international community of the legitimacy and effectiveness of such decisions.

By the end of 2025, it will become clear that the optimal model combines “alienation in strictly defined cases” with creating international management funds with “revolving” financing mechanisms. Of course, this will not cover all the damage caused by the war, but it will significantly contribute to restoring critical facilities.

What Would Be the Best Solution for Ukraine? 

Ukraine's current priority is to receive these resources as soon as possible, as the affected regions require immediate funding. Therefore, Kyiv's position in 2025 remains firm: Ukraine insists on the undisputed right to use Russian assets for its own reconstruction.

However, to gain the support of skeptical Western European capitals, the Ukrainian authorities are actively cooperating with international control bodies and supporting the introduction of clear legal procedures to prevent abuse. The best approach for all stakeholders is not an unstructured withdrawal of funds but a systematic, transparent model of frozen asset management linked to specific reconstruction projects and independent audits.

Therefore, 2025 is when the international community finally begins to turn the huge frozen amounts from geopolitical “ballast” into a real tool for aid and reconstruction. The more countries that join the agreed mechanisms for managing this resource, the greater the effect for Ukraine. The less likely it is that Russian assets frozen in the first years of the war will return to their former owners without proper legal assessment.

This is not to say that all conflicts are off the agenda—the issue of full confiscation, litigation, and individual lawsuits will remain for a long time. However, based on trends, proposals that pose the least legal and financial risk and bring the greatest material benefit to post-war Ukraine are recognized as profitable.

The most promising direction is the creation of an international fund and transferring income-generating assets under its control, which is supported both in the EU and abroad. In the coming years, this model will become the starting point of global efforts to organize frozen Russian resources and turn them into a source of recovery and modernization of the damaged Ukrainian economy.

Igor Popov, United Ukraine Think Tank expert