Ukraine’s FM: Russia’s war budget makes the case for using frozen assets now

Ukraine's Foreign Minister, Andrii Sybiha, argues that Russia's enormous war budget makes it critical to utilize frozen Russian assets for Ukraine's defense and recovery. This long overdue decision could be a game changer, potentially shifting the balance in Ukraine's favor, especially when coupled with strong sanctions pressure. However, acting faster and more decisively than Russia is crucial.

Russia plans to spend a record €180 billion on its military in 2027, more than 40% higher than its 2026 defense allocation. The country's draft federal budget allocates a combined €669 billion to defense and security for the 2027–2029 period, indicating Russia's intention to wage war. Moscow is increasing pressure, intensifying attacks on Ukrainian civilians and raising defense costs for both Ukraine and Europe.

Yet, as the cost of war rises, it should escalate faster for the aggressor. The higher the price for Moscow, the sooner peace can be restored. Half-hearted measures on Russia and support for Ukraine will only prolong conflict and increase the overall price tag. Decisive actions can bring an end to the war.

Recently, Sweden, the Netherlands, Spain, and Poland urged the European Commission to reconsider the use of immobilized Russian assets. While these countries have taken a significant step by immobilizing some €300 billion in Russian central bank reserves, the next step is to put the assets into use. The key debate revolves around scope and risk mitigation.

Ukraine proposes placing the assets under collective EU control, shared risk among European nations, specifically mentioning Belgium's concerns regarding its exposure. Another point of contention is whether this decision should apply to all jurisdictions, not just Euroclear. Despite these concerns, Ukraine argues that Europe should not wait for global coordination when its security is at risk.

Several arguments against the full use of these assets are addressed. Firstly, breaking the rule of law does not apply, as Russia's actions constitute an internationally wrongful act, obligating reparations and allowing countermeasures. Secondly, the euro's credibility as a reserve currency remains unaffected, as the immobilization of reserves did not change the euro's position.

Thirdly, these assets have not influenced Russia's stance on peace talks, as Russia continues to budget massively for the war. Lastly, Russia already seized Western assets during the war, demonstrating that immobilizing assets does not deter aggression.