A significant number of foreign companies in Russia are still from G7 countries. For some, exiting the market responsibly and without additional costs has proven to be challenging

The US’s shift toward asset confiscation mirrors the Biden administration’s challenge in obtaining congressional endorsement for financial aid to Ukraine

The discussions around confiscation of Russian frozen assets intensifies amid uncertainty surrounding future aid to Ukraine. The Kremlin has already issued a warning, stating it possesses a list of US and European companies at risk of seizure if G7 leaders proceed with confiscating approximately US$ 300 billion of frozen central bank reserves. In the event of Western confiscation, Russia intends to reciprocate by seizing foreign investors’ assets, equivalent to the US$ 300 billion of frozen Russian reserves. The Kremlin’s response will correspond to the scale and speed of the West’s confiscation, indicating that a significant seizure of state assets will prompt a more severe confiscation by Russia.

According to the KSE Institute’s “Leave Russia” project, 1,613 foreign companies continue to operate in Russia; however, not all of them are owned by the US and European companies. Around 46% belong to companies from the G7 countries. Although it is hard to assess their current market value, several Western companies operating in Russia have already written down their asset values. Also worried by foreign capital flights, Moscow is effectively forcing companies to stay, forbidding the withdrawal of local assets in dollars or euros, which further diminished the net worth of these assets in Russia. 

As the war drags on, multinationals from so-called “unfriendly” Western nations should prepare for more erratic and unpredictable decision making regarding the nationalization or seizure of their assets. Businesses from G7 countries, especially those in non-high-tech sectors, will be more susceptible to such seizures. 


  • A joint assessment by the World Bank, Ukraine’s government, the EU, UN, and Kyiv School of Economics estimates Ukraine’s 10-year reconstruction needs at US$ 411 billion, 2.6 times its 2022 GDP, excluding the costs of rebuilding structures damaged after the assessment date in February 2023.
  • Canada became the first country to enable the seizure of Russian-owned assets through legal means, confiscating both a company owned by Russian oligarch Roman Abramovich and a privately owned Russian cargo plane.
  • In January 2024, the Biden administration endorsed a bill that proposes granting the president the authority to seize frozen Russian state assets within the US, which will deny owners the ability to contest the confiscation in court afterward. 
  • While the latest detailed breakdown of the central bank assets is unavailable, over 80% of the US$ 300 billion central bank assets is thought to be held in European institutions, with Euroclear, a central securities depository based in Belgium, managing about EUR 190 billion. The US is assumed to hold only single-digit-billion euros of those frozen assets, with some sources suggesting it to be approximately EUR 5 billion. 
  • Belgium, the primary holder of frozen Russian central bank assets, anticipates generating EUR 2.3 billion in taxes from these assets in 2023–2024, intending to allocate the funds toward reconstruction efforts in Ukraine.

Our View

We assess the likelihood of the substantial confiscation of frozen Russian state assets in the immediate future, especially in 2024, to be low. Rather, in line with the statement made by the president of the European Commission in November, the EU will be channeling interest income generated from these frozen Russian assets to Ukraine to aid its reconstruction efforts. The EU has a compelling argument that this revenue is not rightfully owned by Russia and its use does not entail any legal and economic risks. The official announcement of this initiative may coincide with the second anniversary of the war in late February.

Russia will certainly bear responsibility for the damages and losses it incurred, and there is a high likelihood that its frozen assets will eventually be reallocated for the reconstruction of Ukraine; however, the timing of this reallocation remains uncertain. While both the US and UK seem receptive to the immediate confiscation of state assets, the EU, the biggest holder of frozen Russian state assets, continues to exercise caution. From the EU’s perspective, potential confiscation is broadly viewed as unlawful, despite varying opinions among legal scholars. In 2023, the European Central Bank cautioned member states about the potential consequences of jeopardizing the “legal and economic foundations” of international financial order, emphasizing the need for any action to be taken jointly. There are also speculations that Germany fears that seizing government-owned assets could set a precedent, potentially leading to the expropriation of German-owned assets related to World War II by other nations, although this concern is considered one of the less alarming aspects for Europe.

Undoubtedly, the interest income generated from frozen Russian assets will not suffice for Ukraine’s ongoing war efforts and reconstruction activities; therefore, further delays in Western funding will amplify discussions around confiscation throughout the year. If Russian aggression persists and Western support crumbles going forward, there is a possibility that over time, Western leaders may become more amenable to the idea, potentially leading to confiscation in certain parts of the world. However, this is something to anticipate materializing beyond 2024, as such a move would necessitate changes to domestic legislation in countries seeking to implement confiscation and require a joint action from G7 countries.

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