Why G7 decision on Russian assets did not lead to a full-pledged win for Ukraine

On 27 May, G7 representatives announced at the summit in Italy a potential use of $285 billion in frozen Russian currency reserves. While no final decision was made, they claimed "progress" in their discussions.

Read more about what was agreed upon and whether it can be considered progress in the article by Nataliia Sichevliuk, Transparency International Ukraine legal adviser – Money, but not the right kind: Why the West didn't dare to transfer frozen Russian assets to Ukraine.

The specific mechanism is promised to be approved this week, but from the statement already made, it is clear that they plan to confiscate not all Russian assets, but only the interest accrued from them. These funds will not go to Ukraine directly, but to its creditor.

The proposed plan looks like this: Ukraine's allies will not seize the $285 currently frozen assets, but only the interest earned as an unexpected profit from investing these funds.

Previously, the European Union had discussed the possible transfer of interest from these assets directly to Ukraine. Since the interest from investing frozen Russian assets will obviously not cover the damages caused to Ukraine by Russia over more than two years of full-scale invasion, nor will it meet the current military needs of the country, the United States proposed another way: to provide Ukraine with a $50 billion loan.

However, to ensure that Ukraine does not have to repay this loan, it is proposed to secure it with the collateral of the above-mentioned interest from Russian assets. Another important point is that this likely only applies to the interest earned after the decision to confiscate is made.

Thus, the accumulated income over the two years of full-scale invasion is not planned to be seized, citing the prohibition of retroactive law application.

For Ukraine, such a decision is rather a humiliating compromise than an effective measure against the aggressor. Furthermore, practical questions about the implementation of the developed mechanism have only increased.

First and foremost, the question remains of who exactly, in what way, and for how long will pay Ukraine the mentioned $50 billion.

From the experience of making such unpopular decisions, it seems that it should be a shared responsibility.

Instead of having the opportunity to fight using Russia's funds, we again receive money for military and post-war needs from the taxpayers of partner countries — Americans and Europeans. Such a resolution cannot be called a victory in either financial or any other sense.

We believe that all frozen sovereign assets of the Russian Federation, as well as any income from them, should be directly transferred to Ukraine as soon as possible within the framework of the international doctrine of "countermeasures" in response to Russia's unprecedented aggression and numerous violations of international law.

The international doctrine of "countermeasures" allows for the confiscation of state assets if such a state has violated its security obligations. Moreover, according to this principle, freezing assets is also a countermeasure, so the states that hold the assets of the Russian central bank have already violated immunity when they froze these assets.

Further delays in making this purely political decision demoralise and humiliate Ukrainians, who confront the aggressor daily.