U.S. President-elect Donald Trump’s opposition to providing additional funding for Ukraine demands to be taken seriously. While Europe is cumulatively the larger financier of Kyiv’s defense, Washington provides more military aid and is Ukraine’s largest bilateral supporter. If Trump withdraws U.S. financial support, Kyiv may be unable to afford the vast military expenditure—which will cost around $54 billion in 2025, or 26% of Ukraine’s GDP—required to defend itself against Russia’s onslaught.
But there is another way that Ukraine’s defense can be financed. In 2022, the G-7 and its allies froze roughly $300 billion of Russian sovereign assets, rendering them inaccessible to President Vladimir Putin. But while the United States and Canada have moved to seize these assets and make them available to Ukraine, Europe has yet to confiscate the approximately $220 billion in its jurisdiction. To motivate Europe to stand on its own in the era of Trump, President Joe Biden should set the precedent for sovereign seizure and confiscate the estimated $4-5 billion of Russian assets in the United States’ jurisdiction.
U.S. President-elect Donald Trump’s opposition to providing additional funding for Ukraine demands to be taken seriously. While Europe is cumulatively the larger financier of Kyiv’s defense, Washington provides more military aid and is Ukraine’s largest bilateral supporter. If Trump withdraws U.S. financial support, Kyiv may be unable to afford the vast military expenditure—which will cost around $54 billion in 2025, or 26% of Ukraine’s GDP—required to defend itself against Russia’s onslaught.
But there is another way that Ukraine’s defense can be financed. In 2022, the G-7 and its allies froze roughly $300 billion of Russian sovereign assets, rendering them inaccessible to President Vladimir Putin. But while the United States and Canada have moved to seize these assets and make them available to Ukraine, Europe has yet to confiscate the approximately $220 billion in its jurisdiction. To motivate Europe to stand on its own in the era of Trump, President Joe Biden should set the precedent for sovereign seizure and confiscate the estimated $4-5 billion of Russian assets in the United States’ jurisdiction.
Congress has already given the United States the authority to do so, as part of the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act (REPO) that became law in April. However, the Biden administration has refused to exercise that power until Europe passes similar legislation.
But Europe has demurred, citing negative impacts to the euro and concerns over the European Union’s international financial role. Saudi Arabia, for example, has threatened to sell its European debt holdings if Europe seizes the frozen assets. Yet, since G-7 members have pledged not to unfreeze Russia’s assets unless it ceases its occupation and pays reparations to Ukraine, it falls to the United States to prove that there is functionally little difference between an indefinite freezing and seizure.
The G-7 has already broken the taboo of harnessing Russia’s frozen assets. In October, it finalized its extraordinary revenue acceleration (ERA) loan efforts to provide Kyiv with at least $50 billion in returns earned from Russian assets; of that, the United States on December 11 provided $20 billion, with the remainder provided by the other G-7 partners. The European Commission is also providing $20 billion, but has announced it could provide up to $36 billion under the plan, demonstrating Europe’s willingness to continue funding Ukraine when supported by allies. Yet the ERA funds are insufficient for Ukraine’s sustained defense. With Europe overseeing the bulk of frozen Russian assets, including the $180 billion stored in Belgium’s Euroclear, it will remain the war’s lead financier.
The Biden administration’s timid military assistance throughout the war will leave a mixed legacy on Ukraine, but in its final weeks it has signaled a willingness to respond in kind to Russia’s escalation. On Nov. 21, it levied the most significant unilateral sanction since 2022 by blacklisting Russia’s Gazprombank, a step that makes any future European gas purchases unlikely. But with the World Bank’s most recent estimates putting Ukrainian reconstruction and recovery costs at $486 billion over the next decade, more financial assistance is necessary, and seizing the frozen Russian assets under U.S. jurisdiction is a final action that Biden can and must take to help Ukraine.
Washington has refrained from acting unilaterally thus far, preferring to wait until “the political will is there” among European policymakers to seize the far larger pile of funds frozen on their continent. The Biden administration held off not because its share of Russian assets is less than Europe’s, nor for fear of Putin’s retaliation, but because it knows sanctions are most effective when levied multilaterally. Together, in 2022, the G-7 had coordinated the freeze of Russia’s assets and later negotiated the ERA loan efforts.
But any skittishness the Biden administration may have over acting unilaterally should now be cast aside. With a dissolved coalition in Germany preventing any substantial outlays until its February 2025 election and an obstinate Hungary blocking progress on an updated European sanctions regime, significant multilateral action is unlikely during Biden’s remaining time in office.
That is not to say the United States must act alone. Canada, which prepared the authority for sovereign asset seizure as early as October 2023 but has yet to pass legislation, could swiftly follow suit. In the United Kingdom, Foreign Secretary David Lammy has called for the same authority, as did his predecessor, David Cameron. But neither ally will act unless they are following Washington’s lead. By setting a precedent for exercising asset-seizure authority, and demonstrating Putin’s limited ability to respond, the United States and its allies can help smooth the legislative path to asset seizure in Europe, opening the possibility for the European Parliament to finance Ukrainian resistance if the next U.S. presidential administration does pull back its support.
There will be costs. Putin has warned against “stealing” Russia’s assets, and it may retaliate by seizing U.S. corporate assets. Russia claims to have held as much as $288 billion in Western assets in its National Settlement Depository, citing 2022 figures it has not updated. However, roughly half of these assets resided in offshore havens, such as Cypriot and the Netherlands, favored by Russian corporations and individuals—suggesting the true amount of endangered assets is considerably lower. Of course, the Kremlin has already seized billions in Western assets, an effort that—regardless of the fate of its own sovereign assets— shows no sign of slowing down.
On the other hand, concerns that sanctions against Russia would diminish the U.S. dollar’s role as the global reserve currency have proven unfounded, with more than two years of data showing no significant consequence for the dollar’s share of foreign exchange reserves. Trump, with a penchant for unilateral sanctions, has threatened tariffs against countries that seek to shun the dollar-based system. Ironically, this would position him to defend against any blowback from the Biden administration’s asset seizure.
Nevertheless, the costs to Putin must be greater, and Russia’s war economy is showing signs of weakness. Defense spending will consume more than 41 percent of Russia’s state budget in 2025, equivalent to around $169 billion. Payments to wounded Russians and the families of those killed in action will cost Russia another $29 billion. Now is the time to signal that short-term palliatives are insufficient for a long-term war effort.
The caution that the Biden administration and Ukraine’s Western allies have demonstrated thus far over seizing Russian assets is now outweighed by practicalities. Euroclear, once reluctant to meddle with the assets under its stewardship, now encourages seizure to help fund its defense against Russian lawsuits and compensate it for losses if the Kremlin retaliates by confiscating Euroclear’s funds in Russia.
More importantly, North Korea has deployed more than 10,000 troops to fight alongside Russian forces in exchange for oil and modern missiles—a “massive escalation” that threatens to dramatically increase the conflict’s threats, including to Asia. Russia has also hired mercenaries from other third parties and renewed the specter of nuclear war over Ukraine after the unprecedented use of an intercontinental ballistic missile in conflict.
These latest provocations demonstrate that Putin prefers escalation over negotiation as long as he remains confident that financial fatigue will set in among the G-7. The hope that had stayed the U.K.’s hand was that the frozen assets might serve as a bargaining chip in any negotiations. This is no longer realistic. And the best argument against asset seizure—that it was economically unnecessary—expired with the twin forces of a new U.S. administration uninterested in supporting Ukraine’s defense and Europe’s increasing inability to fund that defense on its own.
A proportional countermeasure to recent military aggression is appropriate, and further funding is what is needed. Seizing Russian assets and putting them in Ukraine’s hands is the way for the Biden administration to shore up Kyiv’s ability to defend itself and push Europe to act on its own in an era when further U.S. support cannot be relied on.
The post Seize Russia’s Assets Before Trump Takes Office appeared first on Foreign Policy.
