UK Explores Legal Options to Use Frozen Russian Assets for Ukraine Support
The United Kingdom is actively exploring all possible legal methods to utilize frozen Russian assets held in British bank accounts to support Ukraine, according to the sanctions minister. This move could break a four-year deadlock over concerns about undermining the entire legal framework.
The government has held around £25 billion of Russian assets as retaliation for the country’s invasion of Ukraine. Following actions by the G7, over €260 billion (£228 billion) is believed to have been immobilized globally, with the majority in Belgium. The income from interest on these assets has been used to fund support for Kyiv, with last year’s interest income amounting to €6.9 billion (£6 billion).
However, since the 2022 invasion, there have been calls for the assets themselves to be spent on supporting Ukraine. Some legal experts fear such a move could undermine legal structures, discourage investment, and trigger retaliation from Russian President Vladimir Putin, including in the courts, through counter-sanctions or military escalation.
The UK has so far committed £21.8 billion for Ukraine, including £13 billion in military support, meaning the unfreezing of its Russian assets would more than double its contribution with little further cost to the taxpayer.
Prime Minister Sir Keir Starmer stated last month that the UK, alongside France and Germany, was “ready to progress” to using the full value of frozen Russian assets to support Ukraine to “increase pressure” on Russia and bring it to the negotiating table.
Sanctions minister Stephen Doughty told The i Paper that the UK held a clear position that “Russia must pay for the needless devastation it has caused in Ukraine.” He said the UK was “working hard with its allies to explore every possible lawful avenue to unlock billions in frozen Russian sovereign assets so we can support Ukraine’s armed forces right now.”
“We’ve already provided over £2 billion [for a loan] to Ukraine backed by these assets, but we must go further,” he added. “As long as Putin continues his war of aggression, and in lockstep with the EU and G7, we will continue to choke off the flows into Putin’s war chest that fuel this illegal and barbarous war.”
Under Donald Trump’s 26-point peace plan, $100 billion (£76 billion) of Russian assets frozen globally would be invested in US-led efforts to rebuild and invest in Ukraine, with the US to receive 50 per cent of the profits from this. The remainder of the frozen Russian funds would be invested in a US-Russian pot for unspecified joint ventures.
Kyiv has repeatedly asked that the assets are used to support Ukraine against the invasion.
“Anyone who delays the decision on the full decision of frozen Russian assets is not only limiting our defence, but also slowing down the EU’s own progress,” Ukrainian President Volodymyr Zelensky told European leaders last week. The EU holds about €210 billion (£184 billion) in frozen Russian assets.
Move Could ‘Undermine the Whole Fragile Legal Structure’
Expert opinion is divided on the risk of using the frozen assets, with some believing it could have enormous unintended consequences for the future of the UK and Europe, and others arguing that the workarounds are robust.
Belgium, where most of the European assets are held, has repeatedly raised concerns about liability in the face of a Russian legal challenge. Christine Lagarde, the governor of the European Central Bank, has expressed concerns that using the assets would undermine trust in the euro and discourage foreign investors.
Anna Bradshaw, a partner at Peters & Peters Solicitors LLP who specialises in sanctions, said that the UK could face legal challenges if it proceeded – or end up with a reshaped legal system.
“The legal position has always been that if you freeze an asset using sanctions, that can never be a permanent deprivation of property. You can only permanently deprive someone of their property if they have committed a crime,” Bradshaw said.
To permanently seize frozen assets and give them to Ukraine, the UK Government would first have to prove that the owner had committed a crime, potentially including war crimes, in court, or that the assets had been derived from crime, she said.
Bradshaw said that using the assets without such a process would be an “extraordinary interference with property rights and general legal order”, warning: “Once you go too far, you undermine the whole fragile structure which everything hangs on.”
“That’s the biggest fear amongst the politicians and the lawyers who look at this; the so-called rules-based international order is already on shaky foundations, the UN is losing much of its historic credibility, and there isn’t really as much agreement as you may think on what international law is.”
Bradshaw suggested this could begin normalising the state being able to seize assets without a full legal procedure.
“Once you start pushing the boat out, it’s really quite terrifying to imagine where we could end up.
“Although it’s a noble cause, and everyone would like very much to help Ukraine, that may be a price that’s too high.”
One diplomatic insider said that conversations were ongoing between the UK and European allies, and that London was among the more “forward-leaning” powers on the use of the frozen assets.
However, Britain recognised that it would have minimal impact in acting alone and that any use of the assets must be in tandem with its closest allies.
The insider said that momentum had gathered since a G7 meeting in October and that if this were kept up, there could be some movement on the assets later this year or early next – but stressed that peace talks made the future uncertain.
Russia Could Retaliate
Bradshaw said Russia could retaliate with damaging counter-sanctions against the West or launch a wave of legal challenges.
Putin has already described Western sanctions as “akin to an act of war”.
She added: “We are seeing the first waves of that all over the EU and Western countries including in the UK, where legal challenges are being brought not just against governments for imposing sanctions but also against those who comply with sanctions to the detriment of those people who have had their assets temporarily frozen. That’s because, as matter of law, it’s still their property.”
“This extreme form of interference with property rights rivals that seen in the aftermath of the Second World War, and would be a dramatic departure from the legal tests that we agreed on back then, as set out from the European Convention on Human Rights,” Bradshaw added.
“Yes, you can take someone’s property, but it’s got to be clearly lawful, pursue a legitimate objective necessary in a democratic society and it’s got to be a proportionate response, doing no more than necessary to achieve the objective. There is a risk that the current proposals may be found to fail on all three grounds.”
Fears Are ‘Unfounded and Misplaced’
But Tom Keatinge, founding director of the Centre for Finance and Security at defence think-tank Rusi, said that it was not legal hurdles but a lack of political will preventing the assets from being used.
“The reason nothing’s happened so far is because no one’s put a gun to the head of, particularly the Belgians but certain other people in Europe, and said, ‘this has got to happen’,” Keatinge said.
The sanctions expert said that there were creative workarounds to enable the assets to be safely used.
“There is a concept under international law of countermeasure, which means that if Country A does something to Country B, Country B is allowed to take action which is deemed to be proportionate to what Country A has done to it, as long as that action that Country B is undertaking can be reversed if Country A stops doing what they’re doing,” he said.
“There are plenty of ideas around as to how you could come up with a scheme that would not seize or confiscate Russia’s central bank assets, but simply use them more efficiently than they’re being used right now, or use them as collateral to back loans.
“That’s why all these schemes are quite complicated, is because they are precisely trying to avoid seizing the assets.”
Russia Will Contest It – But West ‘Will Win’
Keatinge agreed that it was possible Russia would launch some legal proceedings, particularly against Belgium, but said there was a “vanishingly small chance that a court is going to find in favour of Russia”.
He suggested that the UK and its allies should not be deterred by threats of escalation from Russia, saying the point of “maximum jeopardy” had been passed.
“The assets were immobilised in March 2022, so 80 per cent of the risk was at the time that the decision was made, because it was not something that anybody anticipated happening – least of all the Russians, otherwise they would have moved their money fast,” he said.
Keatinge noted that the Kremlin had repeatedly threatened escalation against Ukraine’s allies – for instance over the UK’s donation of Storm Shadow missiles to Kyiv – which had failed to come to fruition.
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“I think that on this particular issue, the West has done far tougher things that Russia has not escalated over,” he said.
Keatinge predicted that Russia would be likely to retaliate to use of the assets through “unbearable air raids on Kyiv and other cities”, but would be “very unlikely” to attack NATO territory.
But Keatinge said the UK could not act alone, and that the bulk of responsibility rested on the EU. “The EU needs to lead; the UK needs to be very clear that it’s following right behind,” he said.
An FCDO spokesperson said: “We’ve already provided over £2 billion to Ukraine backed by these assets, but we must go further.
“As long as Putin continues his war of aggression, and in lockstep with the EU and G7, we will continue to ratchet up economic pressure on Russia at every opportunity and bear down on critical revenue streams fuelling this illegal war.”