Ukraine Needs Money to Fight. Can Seized Russian Assets Help?

As much as $300 billion in Russian assets, frozen in the West since the invasion of Ukraine, is piling up profits and interest income by the day. Now, Europe and the United States are considering how to use those gains to aid the Ukrainian military as it wages a grueling battle against Russian forces.

There has been a debate for months about whether it would be legal or even wise to confiscate the frozen assets altogether. While the United States and Britain have favored confiscations, significant objections have come from countries like France, Germany, Indonesia, Italy, Japan and Saudi Arabia, as well as from officials like Christine Lagarde, the head of the European Central Bank.

They argue that confiscation would be a bad precedent, a violation of sovereignty and could lead to legal challenges, financial instability and retaliatory seizures of Western assets abroad.

So the idea of confiscation appears dead for now. But proposals to seize and use the profits earned on those Russian assets — the interest on accumulated cash stemming from the sanctions, said Euroclear, a financial services company — are gaining considerable ground. Both the Europeans and Americans believe that those profits could be used without raising the same legal challenges or risks to the global financial system.

But they have competing ideas on how to use the funds. The Europeans would like to transfer them to Ukraine yearly or biannually. The Americans want to find a way to get more money to Ukraine more quickly.

The debate over which approach to use is intensifying in the run-up to the Group of 7 summit meeting in Italy next month, when it is hoped an agreement will be reached. Here’s a closer look at the plans.