Sanctions have been a weapon of international pressure for decades, but the reaction to Russia’s invasion of Ukraine has taken this policy to new and unprecedented heights. Western powers have frozen hundreds of billions of Russian state assets, plus tens of billions more invested in super-rich oligarchs and regime cronies. The question on many lips now: should these frozen assets be kept permanently and spent helping rebuild a war-shattered country?
The difference between freezing and confiscation is more the lip service of technical gobbledygook than substance, but it’s the essence of the case. Freezing is familiar to us: governments cut off access to property, bank accounts, or securities, but ownership remains where it originally was.
Confiscation, however, means irrevocably divesting the original owner of possession—here, from Ukraine, maybe. The ethical and legal boundaries are crossed in a jiffy, particularly when contrasting private and public assets. It is an easier argument in private property.
Western countries already possess the law to freeze, and sometimes even confiscate, assets linked to a crime or sanctions offense. Recently, a Manhattan court has directed the freezing of $5.4 million of a sanctioned Russian billionaire, and the funds will be transferred to Ukraine.
Measures such as the US Department of Justice’s KleptoCapture Task Force are tackling similar cases, tough, and multilateral action covers tens of billions of oligarch funds frozen in allied countries. Where sanctions busting and money laundering connections exist, seizure is both a realistic and lawful means of supporting Ukraine. State property is much more complicated.
Most of the frozen funds—a total estimated at $350 billion of reserves at central banks—are legally in limbo. Most states lack categorical powers to seize these properties, largely because of the doctrine of sovereign immunity, whereby state property is not subject to seizure by other states.
Exceptions exist in the past, as in the US takeover of Iraqi central bank deposits during the Gulf War, but these were generally preceded by direct military involvement or authorization from the UN Security Council—not present circumstances here.
The case is both legal and ethical. For some authors, the expropriation of state assets in the absence of a robust legal basis corrodes the pillars of international law and property rights. To others, Russia’s massively unqualified deviations from international norms—its aggressive war and humanitarian devastation in Ukraine—require extreme measures. The proposition of resort to confiscation as a countermeasure to these deviations has been catchy, despite ongoing controversy.
Pragmatic and political difficulties just add to the complexity. It would take new laws and widespread global cooperation to accept Russian government money, no easy task. There are even possible ripple effects: central banks could begin to see Western financial systems as less secure, pushing for alternatives to reserve currencies and diminishing the global influence of Western economic institutions.
At the same time, the freeze on oligarch assets is more pragmatic and less politicized. The law is on the books, and initial test cases suggest that courts already do and will approve such transfers. Where the challenge is really speed and efficiency, is accessing the funds to Ukraine without ending up stuck in slow-moving litigation.
The stakes are far bigger than Russia and Ukraine. Confiscation of frozen assets would be a strong message that hostility has consequences, but it could also risk setting a precedent that destabilizes global financial systems. At least for now, most Russian state-owned assets are still frozen, with the discussion about confiscating them ongoing. The world waits, balancing justice, legality, and economic stability in one of the most significant geopolitical battles of our time.