"No More Waiting": Davos Calls On the West to Transfer Russian Assets to Ukraine

"If we really want to change something, we have to make a decision to transfer $300 billion that are frozen in Russian assets to Ukraine. I think in this case we would solve the issue of supporting Ukraine, it would send a very clear message to Russia, and it would also show how we can force Russia to the negotiating table," was the call of Latvian President Edgars Rinkēvičs to Europe and the West in general, made from the centre stage of this year's World Economic Forum, traditionally held in Davos.

The suspension of US humanitarian aid by Donald Trump, who returned to the US presidency almost on the same day, also affected Ukraine. Even if today's problem is much smaller in scale than the delay of $50 billion in US military aid last year, it is a reminder that Western financial assistance could be reduced or even stopped altogether. As the war drags on, Western politicians are finding it increasingly difficult to convince their constituents to continue to provide significant funding to Ukraine. Needless to say, this threatens Ukraine, which receives $40 billion in foreign budgetary aid and tens of billions more in military aid annually to counter the Russian invasion.

But there is a way out of this situation - $300 billion of Russian assets frozen in the West. Last year's delay in US funding made Western politicians take this possibility more seriously. In June 2024, at the G7 summit in Italy, the leaders reached a political agreement to use the proceeds of frozen Russian assets to help Ukraine (the ERA mechanism), totalling $50 billion. In an unprecedentedly short period of time, this agreement was put into practice. Even before Trump's inauguration, the United States allocated $20 billion to the World Bank, of which Ukraine has already received $4 billion. The EU will provide €18.1 billion, the UK - £2.3 billion (almost $3 billion), Canada - C$5 billion (approximately $3.7 billion), and Japan - ¥471.9 billion (approximately $3.1 billion).

The IMF, in its updated Extended Fund Facility (EFF) programme following the fifth review, noted that if the war ends at the end of 2025, Ukraine will need $33.1 billion of the $50 billion to support its budget: $19.1 billion in 2025, $9.2 billion in 2026, and $4.9 billion in 2027. In a negative scenario, if the war continues until mid-2026, Ukraine's budget will need the full $50 billion to cover the deficit.

However, the ERA mechanism is only an interim solution, it does not affect the $300bn of frozen Russian assets.

"The money was provided by the G7 at the expense of the taxpayers of these countries. Russian money remains untouched, and Russia has not paid for the damage it has done to Ukraine, Ukrainians, and business," said Iryna Mudra, Deputy Head of the Office of the President of Ukraine, at a discussion on this topic at Ukraine House on the sidelines of the World Economic Forum in Davos.

She recalled that the G7 and the UN in a resolution supported by 94 states back in November 2022 confirmed that Russia should compensate for the damage caused by its illegal aggressive war through an international compensation mechanism. According to Mudra, the relevant legal infrastructure for this international compensation mechanism has already been prepared, and the International Register of Damages was launched last year in The Hague. The next stage, the establishment of a claims commission, is now being completed.

"There is a clear legal position, supported by the world's best leading professors of international law, that the transfer of Russian state or sovereign funds to an international compensation mechanism to be used to compensate Ukraine and other affected parties for the damage caused by the Russian Federation's illegal war would be a legitimate, proportionate and justified countermeasure in which all states have the right to participate," the Deputy Head of the OP stressed.

She noted that the money would be used transparently and effectively to ensure Ukraine's military and economic survival, and would allow it to buy weapons from Western countries to continue its defence and equipment for reconstruction.

Mr Trump, If You Don't Want to Give Ukraine American Money, Take $300 Billion of Russian Money

"If this $300 billion is confiscated, it will give Ukraine an opportunity to win. If it is given to the defence of Ukraine, Ukraine will have a very long runway to continue to defend itself, and the huge economic inequality between Russia and Ukraine will disappear. When people talk about what is the most important thing that can happen for Ukraine right now, it is absolutely clear to me that this $300 billion is the most important thing. Everything else is secondary," said Bill Browder, founder and CEO of Hermitage Capital Management, at a discussion at Ukraine House.

Browder, who leads the Global Magnitsky Justice campaign and has a 15-year history of confrontation with Putin, stressed that the Russian leader has always believed that the West would get tired of continuing to finance the war, and to some extent his calculation was correct. That is why now, when Putin's economy is "hanging by a thread", it is very important to support Ukraine with confiscated Russian funds, the expert believes. He stressed that all the legal difficulties on the way to confiscating these funds pale in comparison to the price the West will have to pay if Ukraine loses.

"If I have the opportunity to talk to Trump, I will tell him: 'Listen, if you don't want to give Ukraine American money for military support, take the $300 billion. And as someone who knows the art of deal-making, isn't that the smartest thing to do?" Browder said.

Deputy Head of the Presidential Office Iryna Mudra confirmed at the discussion that the issue of confiscating $300 billion of Russian funds is a priority for Ukraine right now.

"We continue negotiations with all relevant stakeholders on both sides of the Atlantic. We ask you to support us in this: raise awareness, engage politicians, speak up, increase pressure. We must not let fear of action paralyse us and allow the worst possible outcome. The breakup of Ukraine would destroy European security and plunge the world into chaos," she said.

According to her, if this step is not taken, the aggressor will realise that it can continue to destroy international law and unity and achieve its goals without paying any price.

Commenting on fears of negative consequences for Western countries from such a confiscation, Mudra stressed that any negative consequences would have already been provoked when the G7 countries froze these Russian assets and stated that they would not be transferred to Russia until Russia pays.

"We have strong economic analysis from the world's best economists on this to back it up. What will damage Western economies, as well as the prospects for sustainable peace, is to return this money to Russia or to allow Putin to end this war on his terms," she said.

All That is Really Needed is Political Will

Yulia Ziskina, senior lawyer at the non-profit organisation Razom for Ukraine, who has been working for several years to confiscate Russian assets, stressed at the discussion that all that is really needed is political will.

"We received a $50bn loan in record time because there was an urgent need. There is an urgent need for this as well. The urgent need is to make Russia stop the war. To make Russia stop the war is to get these assets out of Putin's control. That is the bottom line. This is the political will that we need, and theoretically it could happen before the annual G7 meeting and the Recovery Conference (in Rome on 10-11 July this year)," she said.

She was supported by Browder, who also said that this is not a legal issue, not a question of sovereignty, but a matter of leadership and political will. According to him, there has been no such international leadership: no one has taken responsibility and said that this should be done.

"Everyone seems to be looking at others. No one wants to do it until others do it. And in order to do something, and we saw the same thing with weapons and other things, someone needs to take the initiative and do it. Who will it be? Maybe Donald Trump. Maybe the new German Chancellor after the election. Maybe Keir Starmer. Maybe Emmanuel Macron. I don't know. Someone has to step up and say, 'Enough is enough. Let's end this," said the head of the Global Magnitsky Justice campaign.

Ziskina added that it is easier to show such leadership today because a significant part of Russian state assets, which were held in debt securities through the Belgian Euroclear, are now in the accounts of correspondent banks in the form of cash and are subject to the jurisdiction of many more countries.

"Since these monetary assets are now under the jurisdiction of these countries, national governments can use existing laws, existing powers to regulate banking activities, powers in the field of foreign affairs, emergency powers of the executive branch to regulate and then transfer these funds to an international trust fund to store and manage these Russian funds on behalf of Ukraine and to use them for the benefit of Ukrainian victims," the lawyer of Razom for Ukraine believes.

According to the data she cited, while in 2022 there were approximately $235 billion of frozen funds in Europe, and $34-61 billion outside of it, now there are $165 billion under the jurisdiction of Belgium, Switzerland and France, and $105-126 billion under the jurisdiction of the United States, the United Kingdom, Canada, Japan, Singapore and Australia. "This is approximately 40%, if not more, of the total amount of frozen Russian reserves," the expert stated.

She clarified that according to Euroclear's quarterly data, the depository holds a total of $176 billion of Russian state assets in cash, of which 65% are denominated in euros, but 35% are in non-European currencies, including 17% in pounds sterling, 8% in Canadian dollars, 7% in US dollars, and 2% in Australian dollars.

Artem Shevalev, a member of the Board of Directors of the European Bank for Reconstruction and Development (EBRD), noted in the discussion that it is also important to remember that the actual amount of damage caused by Russia to Ukraine is much higher and may be close to $1 trillion.

"These are huge figures. Ukraine will need these funds for support. It is absolutely clear that they should not come from Western taxpayers. $300 billion - let's approach this as a done deal. I know it is not, but it will help key decision-makers think about how to get more money from Russia to finance Ukraine's recovery and Ukrainian rearmament in the future," Shevalev said.

In his opinion, it is also necessary to talk about reparations taxes and fees, reparations sanctions and tariffs. ‘We have to work together to make sure that after $300 billion, significant funds will come in,’ said the representative of Ukraine to the EBRD.

Summing up the discussions in Davos, it is highly likely that the possible confiscation of $300bn of frozen Russian assets will be one of the important arguments in the upcoming negotiations to establish peace in Ukraine. If Russia refuses or delays such negotiations, Kyiv's chances of getting this money sooner increase. But in any case, it is crucial for Ukraine and its true partners to insist that this money cannot be used as a bargaining chip, and that Russia must pay one way or another!