Russia intends to provide a "symmetrical response" to the confiscation ("quasi-confiscation") or other use of its sovereign assets blocked in Europe. This, however, is likely to require the passage of a separate law. Current statutes do not totally allow foreign assets in Russia belonging to residents of "unfriendly" countries to be nationalised.
At a meeting in Copenhagen in early October, European leaders generally supported the idea of using the proceeds from Russian sovereign assets that have been frozen in the EU to help Ukraine. The point was that this would not be a straightforward confiscation, but a multi-stage scheme that would avoid violating the principle of sovereign immunity. The next discussion is due to take place at an EU summit on 23-24 October. However, a number of countries, particularly Belgium, insist that the risks of such a scheme should be more carefully considered.
On Friday, 10 October, the leaders of Britain, France and Germany issued a joint statement saying they were "ready to move to use the value of frozen Russian sovereign assets" to support Ukraine.
How Russia could respond
Russian official rhetoric boils down to the fact that Europe's initiative is theft, regardless of how the procedure will be technically implemented. Finance Minister Anton Siluanov, among others, stated back in December 2023 that such actions by the EU would be followed by an "absolutely symmetrical response". He also claimed that there are just as many Western assets frozen in Russia as there are Russian assets frozen abroad. These are mainly the assets of companies in "unfriendly" countries whose subsidiaries continue to operate in Russia or have suspended operations but have balances on their accounts, as well as blocked funds of foreigners on C-type accounts (for example, coupons and redemptions on Russian bonds owned by unfriendly investors).
However, there are no directly equivalent assets - i.e., no large amounts of sovereign property belonging to European countries in Russian jurisdiction.
One can only guess what form Russia's response may take, as there is currently no single legal mechanism for nationalising foreign assets. The following regulatory acts may be relevant to this topic:
Presidential press secretary Dmitry Peskov explained that the decree allowing accelerated privatisation was issued "against the backdrop of a hostile environment and hostile actions, in the economy and elsewhere, which are being implemented by a number of European countries, associations of countries, and the European Union, as well as a whole set of sanctions that have been imposed by the United States". Asked whether accelerated nationalisation is now to be expected, Peskov said that Russia is ready to defend its interests in case of illegal seizure of its assets and "will use all the legal tools available".
However, it is likely that retaliatory confiscation of foreign assets would require a separate federal law that would explicitly provide for such a measure. A draft law prescribing a mechanism for confiscating foreign assets, both sovereign and private, in response to "unfriendly actions" by other countries towards Russia and the Central Bank has already been prepared by the Ministry of Justice. In February 2025, it was approved by the government's Commission on Legislative Activity, but subject to further revision. So far, the draft has not been submitted to the State Duma.
It is worth noting that in its published version, the draft law does not specify a direct "asset-for-asset" compensation mechanism. The assessment of damages and the selection of assets must be made by the commission and the court based on the total value. Since a precise value-to-value correlation is difficult, the measures can only be roughly equivalent.
What mechanism is being developed by the EU
German Chancellor Friedrich Merz, in a column for the Financial Times, called for a solution to be worked out to provide Ukraine with an interest-free loan of €140bn. He envisaged that the loan would only need to be repaid after Russia compensates Ukraine for the damage it caused.
The principal jurisdiction where the largest European depository, Euroclear, concentrates the bulk of Russian assets frozen in the EU is Belgium. According to estimates in a European Parliament study, these assets total about €210bn, of which Belgium may hold about €185bn, another €19bn falls under the jurisdiction of France, and another €5bn to €20bn under the jurisdiction of Luxembourg. However, according to Reuters, about €176bn of Russian assets in Euroclear have already been converted into cash, and the remaining securities will be redeemed in 2026-2027.
At the Copenhagen summit, Belgian Prime Minister Bart de Wever called on other EU countries to guarantee that they will share the potential risks with Belgium "if something goes wrong". In other words, Brussels is asking its partners for legal guarantees and joint and several coverage of potential claims and losses so that the country where the assets are sited is not left as the only addressable target for disputes. Christine Lagarde, head of the European Central Bank, also spoke about the need to consider the legal risks and Eurocurrency risks and noted that they are higher for Europe than for the United States.
The European initiative to use Russian assets to help Ukraine is bogged down by the issue of violating one of the basic principles of international law – the principle of sovereign immunity. The Russian Central Bank's assets are protected against legal action in other countries unless Russia explicitly waives this immunity.
Instead of direct confiscation, Belgium and the sceptics supporting it prefer a "quasi-confiscation" scheme, under which it is not the assets themselves that are transferred to Ukraine, but the income they generate. This scheme is already working, international sanctions expert George Voloshin told RBC. This sort of model is considered more legitimate because it does not touch the principal, he said.
For example, in May 2024, the EU approved sending excess revenues from the unplanned management by European depositaries of the frozen assets to Ukraine. The EU argued that these revenues were not part of Russia's sovereign assets and were generated (mainly by Euroclear) through conservative reinvestment, for example of bonds from the Bank of Russia's portfolio that were redeemed during the freeze, into ECB deposits.
EU leaders are now discussing the creation of a special purpose vehicle (SPV) owned by EU governments and, if necessary, the G7 countries. This entity would accumulate revenues from the Russian reserves and use them to secure a loan to Ukraine. In exchange, the European Commission could issue Euroclear zero-coupon bonds guaranteed by the SPV shareholders. This would leave the Russian sovereign assets untouched, the EU bonds would cover Euroclear's litigation risk, and the funds deposited in the SPV could be invested at yields above ECB overnight deposit rates. The participating countries, however, would have to guarantee the EU bonds in proportion to the size of their economies. The details of the scheme are not yet available, according to media reports. EU countries may abandon the idea to create an SPV structure, according to a recent Reuters report.
In this scenario, the frozen reserves of the Russian Central Bank would remain under seizure and would not become the property of the SPV, which would receive only the interest accruing on the funds. In other words, the body of the assets would formally retain its immunity, but their economic value would be used to help Ukraine.
Returning the funds to Russia in the future remains a tricky issue. From the EU's point of view, if a peace treaty is concluded between Ukraine and Russia and Moscow agrees to pay reparations, the assets may be unfrozen. Obligations to repay the "reparations loan", as the European Commission calls it, in theory arise only when Ukraine receives reparations from Russia. Until then, the debt burden for Ukraine is not actually activated, and the risk is distributed among the countries that comprise the SPV shareholders. However, the probability of reparation payments from Moscow in practice is seen as close to zero, so the financial burden may fall on the guarantor countries.
In any case, the scheme currently envisaged, despite bypassing direct asset seizure, looks legally vulnerable and could potentially be challenged in international courts. According to Voloshin, Russia could initiate legal action in various courts, depending on whom it wants to hold accountable. For example, Russia could theoretically sue the countries involved in the confiscation at the UN International Court of Justice (ICJ), charging them with violating international law. However, the ICJ requires the defendant's consent to the court's jurisdiction, and the EU countries are unlikely to provide such consent. It is also theoretically possible to sue in the national courts of the countries where the assets are located, primarily Belgium, although procedural barriers, blocking sanctions, and the political context would seriously complicate this route.