Russia Reportedly May Agree to Use Frozen Assets for Ukraine's Reconstruction, But There’s a Catch

Russia may agree to the use of $300 billion in frozen sovereign assets for Ukraine’s reconstruction but is expected to demand that part of the funds go to regions under its control, three sources told Reuters on February 21.

After the beginning of Russia’s full-scale invasion, the U.S. and its allies froze between $300 billion and $350 billion in Russian sovereign assets, mostly government bonds held in European depositories, restricting transactions with Russia’s central bank and finance ministry.

A source familiar with discussions in Moscow said Russia might accept up to two-thirds of these reserves being used for Ukraine’s reconstruction under a peace deal, provided there were accountability guarantees. The rest, the source claimed, should go to temporarily occupied territories that Moscow considers part of Russia.

Another source confirmed that Moscow is open to using the assets for rebuilding Ukraine but said discussions on allocation are still premature. Two sources also stressed the need to determine which companies would get reconstruction contracts.

A Kremlin-linked source not directly involved in talks said Russia would still push for the full unfreezing of assets as part of broader sanctions relief.

The World Bank estimated a year ago that Ukraine’s reconstruction would cost $486 billion.

Previously, the Russian government has approved a bill that establishes a mechanism for the confiscation of foreign assets in response to “hostile actions” by the United States and several other countries, Russian RBC media reported on February 3.