Iruni Kalupahana JadeTimes Staff
I. Kalupahana is a Jadetimes news reporter covering Russia-Ukraine war
Russia is mulling using $300 billion in frozen sovereign assets to rebuild Ukraine, but it wants part of the funds to go to the territories under its control. This idea comes as early stage discussions between Russia and the United States take place, following a meeting in Saudi Arabia on February 18. While the exact details of these talks remain unclear, Moscow is reportedly open to a potential agreement that could channel a significant portion of the frozen reserves into Ukraine’s reconstruction. However, Russian officials insist that any deal should include accountability guarantees and funds for areas occupied by Russian forces.
The conflict has devastated large parts of Ukraine, causing massive human and economic losses. Millions of Ukrainians have been displaced, and the World Bank estimated a year ago that the cost of reconstruction and recovery could reach $486 billion. The idea of using frozen Russian funds for this purpose has been debated in the West, with some advocating for a direct transfer to Ukraine, while others warn of legal and economic consequences. The Group of Seven (G7) has previously stated that these assets should remain frozen until Russia takes responsibility for the damages it has caused.
There are significant differences between Western allies on how to treat Russia's frozen assets, despite ongoing discussions. Both the European Central Bank and German officials express worry over the confiscation of sovereign reserves due to fear of legal challenges, potential damage to the stability of the euro, and other issues. On the other side, Russia has threatened to seize assets from companies and investors of countries that imposed sanctions, adding that the confiscation of frozen assets violates free-market principles and trust in international banking systems.
However, this situation is not yet over. As the developing situation shows, the Russian leadership persists in its demand for some measure of sanctions relief in exchange for cooperation with the process of rehabilitating Ukraine. The Russian figures involved realize that parting from the assets may eventually be unavoidable, but argue the occupied areas should remain a part of Russia. The result of these negotiations will have serious implications on how it advances the future of geopolitical and economic activities.
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