Russia has indicated a willingness to use its 300 billion dollars in frozen assets to help rebuild Ukraine, but with a condition. Moscow insists that a portion of the funds must be directed towards territories it illegally occupies and falsely claims as its own.
Reports from Reuters suggest that discussions between Russia and the United States are in their early stages. Moscow is considering offering a significant portion of its frozen reserves for Ukraine’s reconstruction as part of a potential peace deal. However, the Kremlin wants control over how these funds are used, demanding that a share of the money be allocated to the one fifth of Ukraine that Russian forces currently occupy.
Sources familiar with the talks state that Russia may accept up to two thirds of its frozen assets being used for Ukraine, as long as there are strict guarantees on how the funds are distributed. The remaining portion would be directed to Russian held territories in eastern Ukraine, territories Moscow continues to claim as part of its state. Another source noted that it is too early to determine how the funds would be divided but confirmed that the Kremlin remains focused on ensuring Russian affiliated companies benefit from any reconstruction contracts.
A separate source, reportedly close to the Kremlin but not directly involved in negotiations, stated that Russia would demand the lifting of Western sanctions in exchange for unfreezing its assets. This aligns with previous threats from Moscow, which has drafted legislation allowing for the confiscation of frozen funds belonging to foreign investors and companies in retaliation.
Background on Frozen Russian Assets
Following Russia’s full scale invasion of Ukraine, Western nations froze approximately 300 billion dollars in Russian state assets held in banks across Europe and North America. These funds have since been at the centre of discussions on how to make Moscow pay for the destruction it has caused.
In December 2024, Ukraine received its first billion dollar tranche from frozen Russian assets, a part of the broader Group of Seven initiative aimed at using these funds to rebuild war torn areas. The total value of this initiative is estimated at 20 billion dollars.
In October 2024, the European Council reaffirmed that Russian assets would remain frozen until Moscow ceases its aggression and compensates Ukraine for the devastation.
