West Weighs Risks of Funding Ukraine’s Reconstruction with Frozen Russian Assets

The US Special Representative for Ukraine’s Economic Recovery, Penny Pritzker, said in Davos, Switzerland, Monday that there is “enormous hope” that seized Russian assets could help finance Ukraine’s reconstruction, but that the US would need Europe’s cooperation to make that happen.

Many Western European countries have been hesitant to agree to Kyiv’s request to freeze $300 billion in Russian assets, as such a move could scare off foreign investment in those countries, and, as Pritzker noted, it will come along with myriad legal headaches.

“I think there’s enormous hope that the Russian sovereign assets could become an easy source of financing,” Pritzker said at the Ukraine House set up at the World Economic Forum, AFP reported, but added: “The whole thing is very complicated. And the first thing you know is a ton of lawyers need to get involved.”

Pritzker, who served as US Secretary of Commerce under Barack Obama, noted that G-7 ministers have been studying the feasibility of such an initiative. Her French counterpart, Pierre Heilbronn, pointed out that two-thirds of the estimated $300 billion of Russian assets in question are in Europe.

“We’re very clear in effect on the fact that there should be a G-7 more or less common position on that,” Heilbronn was quoted by AFP as saying.

France’s Côte d’Azure, for example, is a famous magnet for Russian oligarch money. In 2022, French authorities seized an 80-foot yacht there belonging to Russian financier Alexei Kuzmichev, whose net worth is estimated at around $9 billion. In November of last year, Kumichev’s Saint Tropez villa was searched, and the tycoon was detained on charges of tax evasion, money laundering, and evading international sanctions.

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In other recent examples, last July, Italy froze approximately $2.5 billion in Russian oligarchs’ assets, including bank accounts, villas, yachts and luxury cars. In December, Germany moved to confiscate about $800 million in the Frankfurt bank account held by Russia’s National Settlement Depository.

The total value of assets held in the European Union by Russian individuals is pegged at about $30 billion, but more than $230 billion in funds of the Russian central bank are parked there.

Pritzker, herself a billionaire through her family’s Hyatt hotel chain, explained that the process of transferring seized Russian money to Kyiv would require a “legal theory,” along with legislation, AFP reported.

“There’s real work going on and real effort and real intention, but we’re far from a conclusion,” Pritzker said.

President Volodymyr Zelensky, who will address the Forum on Tuesday, said after talks with Swiss President Viola Amherd that the fate of frozen Russian assets was an “urgent issue.”