Protection from Trump: how Europe prepares for increased pressure over frozen Russian assets

The Group of Seven (G7) failed to approve its declaration by the third anniversary of Russia’s full-scale invasion of Ukraine, partly due to the United States’ opposition to explicitly labeling Russia as an aggressor.

However, another key phrase that was meant to be included in the declaration is equally significant. Over the past three years, G7 declarations concerning Russian assets have consistently repeated the same formula:

"Russia’s sovereign assets in our jurisdictions will remain immobilised until Russia pays for the damage it has caused to Ukraine."

The inclusion (or omission) of this wording in the G7 declaration would have been a crucial signal regarding the future of frozen Russian assets, particularly the $300 billion in reserves held by the Central Bank of the Russian Federation.

The absence or retention of this wording in the G7 declaration was meant to serve as an important signal regarding the future of frozen Russian assets, particularly the $300 billion in reserves held by the Central Bank of the Russian Federation.

The dispute over this wording may indicate that a practical solution regarding these funds is approaching.

At the same time, it suggests that certain options under consideration could conflict with Ukraine's interests – a development largely shaped by the intensifying negotiations between the US and Russia in recent months.

Trump and 300 frozen billions

Despite the significant attention Donald Trump has given to Ukraine, he has not publicly addressed the fate of the $300 billion in frozen Russian assets. At the very least, direct references to this issue in his rhetoric are difficult to find.

However, even before the US presidential election, his allies, particularly then-Senator J.D. Vance, actively opposed the adoption of the REPO Act, a legal mechanism for confiscating Russian assets in the United States. Given this stance and the broader political climate, the likelihood of fully implementing this mechanism under a Trump presidency appears minimal.

Nevertheless, the primary factor shaping the new administration’s policy on Russian assets remains the US-Russia negotiations in Saudi Arabia.

There have been no official statements on this matter, but the Trump administration’s business-oriented approach to international relations leaves little doubt that assets of this magnitude will inevitably become a subject of diplomatic bargaining.

Emerging information already suggests:

the US position in these negotiations may be more favourable to Moscow than to Kyiv.

Notably, just a day after the first round of talks, reports surfaced indicating that the Russian delegation had raised the issue of unfreezing assets blocked in the US following the invasion.

Although the discussion currently concerns relatively small amounts, for example, just $6 billion of the $300 billion in frozen Russian Central Bank reserves, such a decision could set a significant precedent with far-reaching consequences.

First, such a decision could undermine the existing consensus on frozen Russian assets, setting a dangerous precedent. Second, regardless of the amount, it would strengthen the Kremlin’s economic position at what is likely to be the most challenging phase of the war for Ukraine.

Even more concerning is the scenario reportedly discussed in Riyadh: allocating part of the frozen funds to rebuild territories that remain under Russian control.

This option, previously analysed by Ukrainian experts, effectively shifts responsibility for the consequences of the war onto both Ukraine and Russia, an outcome that is entirely unacceptable.

However, this scenario is not inevitable. The primary obstacle to its implementation remains the fact that the majority of the Russian Central Bank’s reserves, over $200 billion, are frozen under European Union sanctions.

And it is the European Union, not the United States, that can make the key decision regarding their future.

EU Response

The fate of frozen Russian assets is one of the most sensitive topics in Ukraine-EU relations. While Canada and the US had previously adopted legislative changes to enable asset confiscation, it was Brussels that took the first practical steps.

First came the transfer of income generated from Russian assets to Ukraine, followed by the use of these funds to secure a "reparations loan" (ERA) for Ukraine. These "interim solutions" remained politically acceptable to European allies, until the situation in the US began to shift.

J.D. Vance’s speech at the Munich Security Conference signaled to Europeans that they needed to take action. Soon after, rumors emerged about a potential announcement regarding the confiscation of Russian reserves at the Solidarity Summit in Kyiv on 24 February. (To clarify: this did not happen and will not happen in the near future due to the lack of consensus on the issue.)

And just the other day, Bloomberg confirmed:

The EU is considering transferring Russian assets to an international compensation mechanism.

Under this mechanism, these assets would be used in accordance with the decisions of the future Compensation Commission, which is expected to be established this year.

This mechanism, which includes the already established Register of Damages for Ukraine, is one of Ukraine’s greatest diplomatic achievements of the past three years.

Transferring Russian assets under its jurisdiction may be the best option in the current situation.

However, this decision has yet to be made.

A compromise for Ukraine

No matter how one assesses the current situation, today we are closer to resolving the issue of Russia’s frozen $300 billion than at any point in the past three years. However, no decision has yet been made, neither in any configuration nor by any of the relevant parties.

On the one hand, rumors about the transfer of part of these funds to Russia for use in the occupied territories should not be taken lightly. This decision was likely made long ago, as regular contacts between the parties were confirmed by Volodymyr Zelenskyy during a press conference on 23 February.

On the other hand, any EU decision on this matter will likely require unanimous approval from all EU member states. Notably, the participating states in the Register of Damages for Ukraine are all EU members – except for Hungary.

It is easy to assume that Viktor Orbán’s government, which maintains close ties with both Washington and Moscow, may withhold its consent.

Under these circumstances, the most beneficial path for Ukraine is for the EU to support the confiscation of Russian assets not for reconstruction, but for compensation to war victims.

This approach would add political and moral legitimacy to the decision to confiscate assets while ensuring transparency in their use. Although, from a tactical perspective, this goal may seem less immediately appealing than reconstruction or military procurement, it carries significant long-term benefits.

As the authors of the Compensation Commission for Ukraine concept have noted:

"No such commission can be fully successful without adequate funding for payments."

Therefore, if Ukraine does not act proactively and demonstrate solidarity with the EU, the new US administration may create conditions under which financing the international compensation mechanism – and providing compensation to victims – becomes impossible.

In such a scenario, the issue of reparations, in practical terms, could disappear from the agenda for many years.

Ivan Horodyskyy

Lawyer, Dnistryanskyi Center

The material was prepared with the support of the International Renaissance Foundation as part of the project "#Compensation4UA/Compensation for war losses for Ukraine. Phase IV: Addressing Specific Issues to Ensure Compensation.