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The writer is chairman of the financial services committee in the US House of Representatives
The recent European Council meeting in Brussels failed to force Russia to finally pay for its aggression against Ukraine. This critical meeting was an opportunity to change course and greatly increase the pressure on President Vladimir Putin to end his illegal war. Yet, it’s not too late for Europe to act — at no cost to taxpayers anywhere.
The council should agree to seize the roughly €258bn in frozen Russian sovereign assets in Europe as a down payment of Russian compensation for the damage it has unjustly inflicted on Ukraine. Alternatively, some portion of those assets could strengthen Ukraine’s military defences and enhance its negotiating position before any serious peace discussions begin.
The recently elected German chancellor, Friedrich Merz, indicated in May that he was open to making full use of Russia’s frozen assets to aid Kyiv. He is backed by a governing coalition that sees them as a potential source of economic and military support for the Ukrainians. So long as the war continues, Ukraine’s economy will remain in need of external assistance. Kyiv requires a global partnership for financial aid far beyond what the IMF, World Bank and other donors have provided or realistically can provide in the future.
Russia, however, still owns its immobilised sovereign assets held abroad. Thanks to action last year by the G7 leaders with support from the US and Europe, the “extraordinary revenues” earned from those frozen assets are starting to flow to Ukraine. So far, approximately €28bn has been disbursed. But it’s not enough. Legal scholars and a report commissioned by the European parliament have clearly affirmed that action can be taken to compensate Ukraine under the law of collective countermeasures. The European Council must go beyond the G7 status quo; simply restating that all immobilised assets will remain immobilised is necessary but not sufficient.
Three immediate steps are in order. First, all nations holding Russian assets must segregate those into clean escrow accounts as recommended by several international experts to be held in trust for Ukraine’s benefit. This step includes full accountability, transparency, good governance and professional asset management to protect Ukraine’s interests. Because the bulk of these assets are held in Belgium by Euroclear, Belgian authorities will need to receive indemnification assurances.
Second, the council must immediately begin working with all affected countries to create the Ukraine international trust fund recommended last year by the Parliamentary Assembly of the Council of Europe.
Third, the transfer of a significant part of the frozen funds to Ukraine for its urgent security and financial needs must begin soon. Frozen Russian funds could move quickly either through existing European fund mechanisms or, alternatively, through the World Bank.
The US needs to act as well. I have urged President Donald Trump to cancel the Biden-era policy of timidity to send a strong signal to Putin and help Ukraine from a position of American strength, by fully implementing the Repo for Ukrainians Act and immediately transferring an initial $5bn in Russian central bank reserves immobilised in the US by executive order. This will continue the demonstration of Washington’s resolve to stand with its allies.
Given Putin’s continued commitment to murder and mayhem, the status quo is unacceptable economically and geopolitically. If Russia can incapacitate Ukraine economically, then Putin wins. Ukraine, Europe and the rest of the world will then face a catastrophic financial loss and invite further Russian aggression elsewhere. Europe holds tremendous leverage over the outcome of this conflict. It should seize the opportunity while it still can.
