Russia proposes frozen assets for Ukraine

Russia is reportedly considering a proposal to use $300 billion of its sovereign assets, currently frozen in Europe, for the reconstruction of Ukraine as part of a potential peace deal. This idea emerged during early-stage face-to-face talks between Russia and the United States in Saudi Arabia. Russia, however, insists that a portion of these funds be allocated to the one-fifth of Ukraine that its forces control. The United States and its allies froze these assets in 2022 following Russia's invasion of Ukraine. While the World Bank Group estimated Ukraine's reconstruction costs at $486 billion a year ago, the proposal from Russia could offer a path towards ending the conflict and potentially lead to a gradual lifting of sanctions. Western officials, particularly in the German government and the European Union — European Central Bank, have expressed concerns about the legal implications and potential undermining of the euro's reserve currency status if sovereign reserves are simply confiscated. Russia has also drafted retaliatory legislation to confiscate funds from companies and investors from 'unfriendly states'.