Recent reports suggest that the Kremlin is willing to concede its $300 billion in frozen assets in exchange for financial support in Ukrainian territory under Moscow’s control. European nations must reject this idea and seize all of the funds sitting in Europe in support of Ukraine.
Russia’s full-scale invasion has created one of the most perilous environments Europe has witnessed since the end of the Second World War. To meet the severity of the security crisis, the European Union (EU) must ratchet up its support for Ukraine. To put it bluntly, the EU should confiscate the more than $200 billion frozen assets in EU financial institutions to fund Kyiv’s defenses. The bloc’s leadership is more critical now than ever.
Given recent developments, it is evident that Europe must lead the effort to support Kyiv. Failure to do so could leave Europe vulnerable to Russian aggression and influence, potentially leading to a destabilized region and a weakened EU.
During their negotiation in Saudi Arabia, U.S. and Russian delegations discussed the war in Ukraine and rekindling political and economic cooperation between the two countries.
Such dialogue underscores the need for the Europeans to step up their efforts in bringing much-needed aid to Kyiv. And the several hundred billion dollars in Russian assets sitting in European financial institutions are low-hanging fruit.
As it stands, the outcome of Russia’s war against Ukraine will depend partly on financial resources provided to Kyiv by the West.
Ukraine’s military has shown tremendous strength and resilience against Russian brutality. Moscow, initially expecting to overpower Ukraine in a matter of days, grossly underestimated Kyiv’s defenses and fighting abilities and has paid a steep price of more than 800,000 casualties.
According to the Moscow nonprofit Center for Macroeconomic Analysis and Short-Term Forecasting, Russia’s economy has been stagnant outside of defense sectors since 2023. Meanwhile, the Central Bank of Russia has kept the economy’s key interest rate at 21% for the past few months.
All of this is due to Moscow’s full embrace of a war-economy, which has fueled inflation and a struggling ruble.
To manage some of the economic pressures, Moscow has tapped into its National Wealth Fund. However, European economists estimate the amount of liquid reserves in the fund, which has gone from $113 to $37 billion since the start of the war, are on pace to expire by the end of 2025.
Yet, despite all of their concerns, Moscow will be able to continue with its campaign for the short-term.
This suggests that Russia’s key to victory does not lie in its military, but in its ability to outlast the West.
Therefore, Putin’s military strategy has shifted from projecting strength to betting on Western support for Ukraine to falter before Russia’s economy does.
Now is when Europe should finally act on the frozen reserves sitting in European countries. In fact, this should have happened long ago.
Without continued U.S. support, Kyiv will struggle to defend itself. Europe is unlikely to be able to fill the void left by an end to U.S. military assistance, although it can and should step up economic and other forms of aid no matter what. The bloc has already started, with their total allocation to Ukraine sitting at $138 billion compared to the Washington’s total of $119 billion.
Confiscating the reserves will provide coverage beyond what the U.S. has committed to providing and lift some of the financial pressure off of EU nations, buying time for Ukraine to continue to defend itself.
Until now, Brussels has used the interest earnings from the immobilized assets sitting in Euroclear to support Kyiv. However, these amounts only add up to a few billion, which is not nearly enough to make a significant impact.
Due to worries about the legal process and risk associated with seizing the assets, European nations have been reluctant to move forward. Though the concerns are valid, circumstances have changed. Without Western support, Putin’s initial assumption that he can violate international norms with minimal repercussions, which persists from his initial 2014 invasion of Crimea, will reign true.
No one understands the gravity of the situation better than Europe.
At the recent Munich Security Conference, Finnish President Alexander Stubb emphasized the importance of continued support for Kyiv with a “need to re-arm Ukraine and put maximum pressure on Russia.” Seizing the frozen assets is putting that strategy into action while pinning the responsibility where it belongs.
The assets remain the best leverage the Europeans have—it’ll be a mistake to let them sit idle. The European Union should act now.
