Frozen Russian Assets: Why the West Chooses Negotiations Over Confiscation

4 Sep, 2025
| Salome K

The West is searching for an approach to the frozen assets of Russia: negotiations instead of confiscation.

The US Secretary of the Treasury Scott Bessent clearly outlined the position of Washington: the frozen Russian assets should be not an instrument of force pressure, but a part of a long-term strategy and future negotiations. This statement, which sounded against the background of discussions in the EU about new sanctions, emphasizes a more weighed and cautious approach of the USA, which diverges with the demands for an immediate unilateral confiscation.

Despite strong pressure from Ukraine and a number of European capitals, calling to use these means for the restoration of the destroyed country, the West is not in a hurry to go on radical steps. The main restraining factors remain the absence of a reliable international legal base for a similar confiscation and deep political disagreements between the key players. Many lawyers and diplomats warn that a unilateral seizure of assets can undermine the trust in the Western financial system and create a dangerous precedent in international law.

Instead, as Bessent notes, Washington considers these assets as a strategic lever, which can be activated within the framework of a future peaceful settlement. Such an approach suggests that the assets can become a part of a complex diplomatic bargaining or be legally transferred as reparations only after the achievement of a comprehensive agreement, recognized internationally.

This position testifies to a pragmatic view, which places long-term stability and the supremacy of law above momentary political benefits. The frozen funds are turning into not a bargaining chip, but one of the keys to a possible completion of the conflict, which forces all sides to more thoroughly evaluate their further steps.

In the conditions of growing geopolitical tension, the role of the frozen assets is becoming more and more significant in the context of the search for paths of a settlement of the conflict. The European Union, despite its determination to support Ukraine, also shows restraint in relation to the confiscation of Russian funds. As sources in Brussels note, the EU prefers to act within the framework of an international consensus, in order to avoid potential risks for the economic system and prevent a further escalation. In particular, the possibility of using the assets as guarantees for future reparations or for financing restoration projects under the control of international organizations is being discussed.

One of the key moments in the discussion remains the question of legitimacy. Many experts emphasize that for the use of the frozen means it is necessary to develop clear legal mechanisms, which will be recognized not only by the Western countries, but also by the global community. Otherwise, there exists a risk that such actions will be perceived as arbitrary and unjust, which can lead to a loss of trust in international institutions.

At the same time, Washington and its allies are actively studying alternative approaches. One of the variants is the creation of a special fund, where the means from the frozen assets will be directed, and their use will be regulated by international agreements. This will allow not only to ensure the transparency of the process, but also to minimize the political risks, connected with unilateral decisions.

Meanwhile, Russia continues to speak against any attempts of confiscation of its assets, calling them illegal and threatening with reciprocal measures. Such a reaction only emphasizes the complexity of the situation and the necessity of a thorough weighing of all possible consequences. In conditions, when each side strives to protect its interests, the question of the frozen assets remains one of the most complex elements in the puzzle of international relations.

Parallel to the discussions about the legitimacy and possible mechanisms of the use of the frozen assets, arises the question about their economic impact. Experts point out that the confiscation or redistribution of such means can have long-term consequences for the world financial system. In particular, this can undermine the trust in the dollar and euro as reserve currencies, and also provoke an outflow of capital from the Western economies. Some countries, especially those that preserve neutrality in the current conflict, may begin to search for alternative paths of storage of their assets, which will strengthen dedollarization and fragmentation of the world financial architecture.

Besides, a significant part of the frozen assets belongs to private investors and companies, which adds yet another level of complexity. Their interests must be taken into account, in order to avoid judicial proceedings and claims on the international level. This requires the creation of compensation mechanisms or clear rules, which would protect the rights of the owners of the assets, not undermining at the same time the goals of their use for the restoration of Ukraine.

In the context of diplomatic efforts, it is important to take into account also the role of third countries, such as China, India, and Turkey, which can influence the formation of an international consensus. These states, not being supporters of unilateral measures, can act as mediators in the search for compromises, capable of suiting all sides. Their participation can become a key factor in the development of multilateral solutions, which would take into account both the interests of the West and the position of Russia.

Meanwhile, against the background of ongoing negotiations, Ukraine insists on the soonest use of the frozen assets for covering the damage, inflicted by the war. Kyiv emphasizes that such steps will not only strengthen the trust in international law, but also become a symbolic act of solidarity with the victims of the conflict. However, for the achievement of this goal, it is required not only political will, but also a thorough coordination between all interested sides, which makes the process even more complex and multi-level.

The economic consequences of the confiscation of the frozen assets can manifest not only on the macro-level, but also in concrete sectors of the economy. For example, financial institutions, working with international transactions, may face increased risks and costs for the compliance with new regulatory requirements. This can lead to a reduction of their competitiveness on the global market and a slowing of the rates of economic growth in developed countries. Besides, companies, whose assets were frozen, may reconsider their strategies of investing, preferring more safe jurisdictions, which will strengthen the process of deglobalization.

Also it is important to take into account that the use of the frozen assets for the restoration of Ukraine can create a precedent, which will influence future conflicts. If such measures become the norm, this can change the behavior of states in the case of geopolitical tension. For example, countries may begin more actively to withdraw their reserves from international banks or search for ways of protection of their assets through digital currencies and blockchain-technologies. This can lead to a further fragmentation of financial systems and a reduction of their effectiveness.

At the same time, for the successful realization of initiatives on the use of the frozen assets, the support of international organizations, such as the IMF and the World Bank, is necessary. Their participation can help in the development of transparent mechanisms of distribution of the means and ensuring their use in accordance with international standards. However, for this, it will be required to strengthen the trust between the participant-countries and to overcome the existing disagreements.

Finally, it is important to remember that the long-term consequences of such decisions will depend on how effectively it will be possible to balance the interests of all sides. If the measures are perceived as just and well-founded, this can strengthen the international financial system. Otherwise, the world may face a strengthening of instability and a growth of geopolitical tension, which will negatively tell on the global economy as a whole.