Leaders from Poland, Estonia, and Finland have in the last week added to growing calls to liquidate Russian central bank reserves, which have been valued between $200 billion and $300 billion. 

Russian central bank reserves located in Europe—including currency, gold, and government bonds—were seized as part of wide-ranging sanctions against the country when Russia launched its February 2022 invasion of Ukraine.

To date, they have stayed put owing to questions over the legality of unlocking the funds, nerves over the ramifications of unlocking them, and their alternative potential as a bargaining tool in peace talks.

In July last year, the G7 nations agreed on a landmark deal to use the proceeds from the profits of Russia’s frozen assets to fund Ukraine’s defense effort, which helped fund a €50 billion loan to the country, but that is where progress has stopped. 

European leaders pile on the pressure

The urgency to unlock new avenues for funding has accelerated since Donald Trump’s inauguration in January, after the U.S. president excluded Europe and Ukraine from initial peace talks with Russia and gave early verbal concessions to Putin, spooking Europe.

An easy win, as far as the EU’s Eastern and Baltic states are concerned, is to liquidate the central bank reserves assets Russia left behind.

Poland’s prime minister, Donald Tusk, posted on X last week: “Enough talking, it’s time to act! Let’s finance our aid for Ukraine from the Russian frozen assets.”

In a televised address to the nation on Monday, Czechia Prime Minister Petr Fiala followed suit.

“For further military support of Ukraine, we must use money from frozen Russian assets from across the entire Europe,” he said, adding that Trump had “decided to completely transform” U.S. foreign policy.

“The speed, thrust, and rhetoric are certainly surprising, but the shift of the United States away from focusing on Europe should not surprise us,” said Fiala.

Estonia’s foreign minister, Margus Tsahkna, told Reuters: “The decision to use the windfall profits was a step in the right direction. I see that the time is ripe now to take the next step.”

In February last year, former Treasury Secretary Janet Yellen marked herself out as an early advocate of liquidating the hundreds of billions of dollars in seized Russian assets.

“I believe there is a strong international law, economic, and moral case for moving forward. This would be a decisive response to Russia’s unprecedented threat to global stability,” Yellen said.

The latest calls have, however, highlighted a divide in the EU. 

Germany, France, Italy, and the European Commission have resisted calls to unlock the funds for their own use. The opposition comes from a fear that the seizure of free market assets would alarm international investors and hurt Europe’s legitimacy in the long run.

Instead, these countries prefer to view the frozen reserves as a strong bargaining tool in negotiations with Russia, a point French President Emmanuel Macron repeated during a conversation with Trump this week.

Some in the Russian administration are reportedly ready to part ways with its reserves, provided the territories by the country stay after the war, with some even suggesting the reserves are used toward payment for this territory.