Support grows for selling seized Russian assets to fund Ukraine – but experts warn it's a complicated and risky strategy

Support grows for selling seized Russian assets to fund Ukraine – but experts warn it's a complicated and risky strategy
Spanish Civil Guards stand by the Tango superyacht, belonging to Russian oligarch Viktor Vekselberg, which was seized on behalf of U.S. authorities, as it is docked at the Mallorca Royal Nautical Club, in Palma de Mallorca, in the Spanish island of Mallorca, Spain, April 4, 2022.Juan Poyates Oliver/Handout via REUTERS
  • Momentum is growing among some Western nations to seize and sell Russian assets to fund Ukraine.
  • But changing ownership of Russian assets to sell them means lengthy legal battles, an expert told Insider.

Momentum is growing among Western nations to seize and sell Russian assets to help fund the cost of Ukraine's defense and reconstruction. But experts say that the reality of doing so could be complicated, lengthy and risk further inflaming tensions with Moscow.

Calls for Russian assets to be seized and sold were voiced in April when Ukrainian President Volodymyr Zelenskyy's chief economic adviser told Bloomberg that Kyiv was negotiating with allies to launch a "mass attack on all major assets." Zelenskyy himself reiterated the proposal at an April 21 meeting of World Bank and International Monetary Fund member states.

Wider support for the strategy has started to develop. The Biden administration revealed plans Thursday to streamline the US' ability to seize Russian oligarchs' mansions and yachts to help fund Ukraine's defense. In Europe, Poland is urging fellow EU members to draw up new powers to sell sanction-hit Russian assets, the Financial Times reported, while Canada's parliament is looking at changes to its sanctions law that would give it powers to transfer the proceeds of confiscated assets to victims of war.

Ukraine has suffered at least $60 billion in physical damage since the Kremlin ordered its troops into the country, the World Bank said on April 21. But financing costs will be much larger, Ukraine's government told the bank's leaders, saying they will need about $600 billion to rebuild, and called on allies to donate 10% of their reserve assets.

While revenue generated from seized assets offers a potentially attractive revenue stream for Ukraine's reconstruction, experts have warned the strategy is far from straightforward.


"From a legal standpoint, it's very complicated," Tiffany Comprés, an attorney specializing in international law at FisherBroyles told Insider. Asset sales could trigger years of legal battles, confounding Ukraine's need for urgent assistance, she said.

Waves of international sanctions in response to Moscow's decision to invade Ukraine have resulted in the freezing of some assets belonging to oligarchs seen as being close to Putin, including yachts, jets, and luxury homes. That alone doesn't change their ownership status, Comprés said, making it challenging to sell them for any possible reparations.

"All it does is make the assets untouchable," Comprés explained.

The measures could also risk inflaming tensions with Moscow, particularly if countries pursued Russian state-owned assets.

"We need to be careful not to give Russia cause to justify their action," Tom Keatinge, Director of the Centre for Financial Crime and Security Studies at the Royal United Services Institute for Defence and Security Studies, told Insider.


Changing ownership of any Russian assets – whether they belong to individuals or the state – would require transferring ownership to another government or neutral entity, and would be challenging as that process differs by jurisdiction, Comprés said.

The process for seizing state assets is potentially even more complicated than impounding those that belong to individuals, given that it would require involving international bodies such as the United Nations or the International Criminal Court, Comprés said. Impounding and selling government assets, such as oil tankers for example, may require proving that Russia had committed war crimes in Ukraine.

That would pose another set of hurdles, the lawyer said, not least the complexity and timeframe of war crime tribunals, Russia's veto power within organizations such as the UN, and the fact that the country is not a signatory to all international treaties related to war crimes.

"And then the other question is…do these treaties even provide for reparations as part of the punishment for a war crime?" Comprés said.

The lawyer said the best scenario would be adopting national legislation in multiple jurisdictions alongside an international fund for reparations – but challenges still persist after passing legislation.


The Biden administration's current proposal to seize oligarchs' assets is non-binding, for example. And if it does translate to practical legislation, Comprés said, the maintenance of any seized assets to retain their value is extremely costly.

There's also the issue of proving that a frozen asset is tied to criminal activity, a process which could amount to a long court battle, she added. Russian billionaire industrialist magnate Oleg Deripaska is still contesting US sanctions placed on him following Russia's annexation of Ukraine's Crimea region in 2014.

And incriminating oligarchs would still require respecting due process; the challenge lies in doing this in a timely manner, and without easy access to information from Russia that could serve as evidence, Comprés explained.

The more likely solution would be reparations as part of any peace process, the lawyer said. It would also be the one least likely to amp up tension or prompt retaliatory measures from Russia.

"Unless you want to escalate against Russia, the idea that you would steal their ships or their central bank reserves or whatever, that's quite a big step," said Keatinge. "I don't think it would be wise for the West to [do so]."