Why the urgency for Europe to seize CBR assets?

I chaired a session this week at Chatham House dedicated to finding practical solutions to enabling Ukraine to access immobilized CBR assets. I purposely asked participants to avoid the why question, just how we actually can get this done – avoided because for me it is a slam dunk in term of the why debate. New hurdles keep being put in front of the move, and the session was aimed at finding paths thru some of the obstacles now being presented by the in-effect Belgium veto which derailed efforts by the EC to roll out a Reparations Loan for Ukraine at last year’s European Council summit in December 2025.JOIN US ON TELEGRAMFollow our coverage of the war on the @Kyivpost_official. Actually, I am part of a working group which presented a paper at CH, which provides proactive solutions to overcome Belgian objections. See our proposed solutions here. The reality is that none of this is rocket science and the solutions have been on the table since soon after the assets were first immobilized in April 2022. It’s just a sad indictment of Western institutions, and the West’s political leadership that no one has bit the bullet and got this done. As ever with everything to do with Europe, one can conclude that the issue is not really about the legal issues, or economics and market aspects, but it’s the politics of all this. If there is the political will, Europe always finds a solution – we have seen that with the COVID response, climate change, with the European sovereign debt crisis, SAFE funding et al. With that in mind, I thought it useful to spell out to our political leadership in Europe why it is so important to find a solution, and quick to ensure that Ukraine is able to access the full $300 billion plus in CBR assets for its defense. Other Topics of Interest Polish PM Donald Tusk has told NATO’s Mark Rutte that Warsaw will not fund US arms purchases for Ukraine under the PURL scheme due to high domestic defense costs. Here goes: 1.The moral argument must be obvious, or maybe it is not. Russia is the aggressor, having broken international law by invading and illegally occupying Ukrainian territory, and has killed and murdered hundreds of thousands of Ukrainians, alongside reaping hundreds of billions of damage on the Ukrainian economy. Surely the aggressor should compensate the victim for their crimes? This helps the rehabilitation of the victim but also should act as a deterrent to the aggressor not to repeat the crimes. In terms of the damage the World Bank’s now annual Rapid Damage and Needs Assessment report from February 2026 estimated the total cost of reconstruction for Ukraine because of the war at $588 billion. And counting, so roughly $147 billion a year. So by the five-year mark, the total tab could be $735 billion, and that is not including the recompense for the hundreds of thousands of Ukrainian lives lost or injured. Probably the true cost of fair reparations will be a trillion dollars plus. Russia should be made to pay, it is the aggressor. 2. The financial imperative. Thanks to the Kiel Institute of the World Economy’s stellar work, we know that the war is costing the West, and now mostly Europe, around $100 billion annually in its support for Ukraine’s defense against Russian aggression. Actually what is clear is that is not enough, as that I has only been enough to fend off a Russian victory, not win, and unfortunately Western underfunding of Ukraine through its war is likely one reason the war is still going on almost five years in. See the Kiel data here. Now the data here does not lie, and whatever Trump might suggest in terms of the supposed $300 billion plus US contribution to Ukraine’s defense, actually the US has provided only €115 billion, and continental Europe and EU institutions €237 billion, with the rest including the UK, Canada and Japan around €31 billion. And most, if not all the US contribution was under the Biden presidency. And, even then, the bulk of this money remained in the US, as it largely included drawdown of US munitions stocks. A hundred billion buck a year funding contribution for Europe is nevertheless a challenge, given debt and deficit challenges in Europe, the competing demands for public spending, and the rise of the far right, playing to the Russian script as to why European taxpayer money is being used to fund Ukraine’s defense. The counter to this pro Russian far right script is that every dollar spent in Ukraine is for Europe’s defense as it helps buy Europe time to get to its own defense in order, after years of underinvestment. Put another way, Europe spends around 2.5% of GDP on defense as is, and on a $25 trillion economy, that’s around $620 billion. The NATO commitment is to go to 3.5% of GDP over 5–10-year period. But if Russia wins in Ukraine, its defense capability and likely offensive intent will increase by multiples. Europe then will face the prospect of moving to the 3.5% target, and likely well beyond in very short order. That’s a $250 billion increased spend for each 1% of GDP increment, and it’s spend which will be indefinite. The alternative is spend $100-150 billion a year now supporting Ukraine, to stop Russia and save hundreds of billions of dollars in longer term European defense spending. Spend $100-150bn now, for a few years, to offset the needs to spend $250 billion plus pa for many years to come. It should be a no brainer. Unfortunately the reality is that with the US AWOL in support of NATO in Europe, Europe is on its own in supporting Ukraine, and it has been drip feeding Ukraine financial resources for its defense pretty much for the duration of the war. A hundred billion a year sounds like a lot but it has only been enough to keep Ukraine in the war, not win. Likely $150 billion plus would be what it would take to put Ukraine on the front foot. But even existing European commitments no longer look enough to support Ukraine. And over the past months various Ukrainian and other sources, including the IMF has presented warning of gaps in Ukraine funding. Ben Hilgenstock from the Kyiv School of Economics presented a short paper on Ukraine’s current financing challenges at the Chatham House event this week. According to Ben, Ukraine’s current financing gap is close to $100 billion for the period 2026-2029, including $70 billion in 2027 alone. These figures are close to Ukrainian government and IMF estimates. Note that this is also on the assumption that the war ends in 2027, which seems optimistic at this stage. But each year the war extends adds another $65 billion in Ukraine funding needs. It also fails to account for the increased military costs of the war - estimates there suggest that direct defense related costs are likely to increase from $114 billion in 2026 to $150 billion by 2028 and $180 billion by 2029. All told, assuming the existing $100 billion financing, gap, extending the war out by a year, and including some additional assumption for the increased cost of the war, could put the shortall in Ukraine funding at close to $200 billion for the period to 2029, and again assuming the war ends in 2028 which might be optimistic. Above I make the cost benefit analysis for Europe spending to back Ukraine and save itself long term defense costs. But is the political reality in Europe at present that the current political establishment can secure an additional $200 billion commitment to support Ukraine – sufficient to send a clear signal to Putin that Europe stands behind Ukraine, and willing to do whatever it takes? With French elections due in May 2027, and a potential Le Pen win risking a fissure in support in Europe for Ukraine I have my doubts. From a philosophical point of view, I have long asked the question as to why European taxpayer money is being used to support Ukraine, against Putin’s brutal war in Ukraine, when over $300 billion in Russian taxpayer money is sitting in Western bank accounts doing nothing? Again make the Russian taxpayer pay for its brutal aggression against Ukraine. And it’s not a cost-free option for European politicians to continue to tap their own taxpayers or markets for funding Ukraine in this war. The political cost is a gift to the far right, the likes of Le Pen and the AfD in Germany, et al. Why gift them this political capital, why not take that away from them by using immobilized CBR assets to fund Ukraine and win the war? Even borrowing on international capital markets to fund Ukraine is not cost free - more debt means higher borrowing costs and ultimately lower European growth - again a gift to the far right in Europe, friends of Putin all. The reality is that Europe is unlikely to be able to agree on a program of support for Ukraine on the scale now required - hundreds of billions of Euros in new money - and to front load that money to put Ukraine is a position to win the war and quickly. The only option to outspend Russia, is to fully utilize the $300 billion plus in immobilized CBR assets. Utilizing this money for Ukraine’s defense could moonshot Ukraine’s military capability to win the end, end the war quickly and again provide the best cost saving option for Europe - as only be defeating Russia in Ukraine, can the threat from Russia be assuaged to counter the need for much larger long term defense spending. 3. Markets - the shattering of the reserve currency defense. The standard argument used against seizing immobilized CBR assets is that this will somehow be an attack on property rights and that it will undermine Europe, and G7 currencies’ positions as global reserve currencies. The reality though is that this status was surely already undermined, if at all, with the move to first immobilization in April 2022. At that time, and after the West has told Russia that the CBR reserves were being put beyond its reach until the war in Ukraine ended, and it agreed to pay reparations for the war to Ukraine. Actually, already the assets, or the interest stream from assets has been significantly used or pledged against various Western support programs for Ukraine, including the ERA and USL. Any third country would surely have concluded that if they break international law, invade another country, commit war crimes, as Russia has done, that their assets too could be put beyond their reach in Western jurisdictions. That has all been plain to see. But thus far there is zero evidence that any third country has reacted to the immobilization by moving assets out of Western jurisdictions. Why? The reality is that there are no real alternative liquid markets for countries with large FX reserves, such China and the Gulf States. They don’t trust each other, so would not allocate their own reserves across each other. So this idea that moving to seize and allocate CBR reserves to Ukraine would undermine the Euro, or the dollar or sterling is just scaremongering. Actually, I would argue that a failure to allocate CBR reserves, resulting in the underfunding of Ukraine in this war, to the point that it could face defeat would be an existential blow and risk to Europe, the European project and the euro. Imagine, such a scenario which would likely see tens of millions of Ukrainian moving West, straining the political, social and economic fabric of Europe - again playing into the hand of the far right. Imagine Russian military might combining with that of Ukraine, posing a huge military risk then to Europe, and the need then for Europe to increase defense spending by multiples, say from 2.5% of GDP to Soviet era level of 5% of GDP. On already fragile European public finances that would mean higher deficits, more debt, higher taxes, less growth, and likely less room for welfare and more social unrest and instability as a result. This would be a huge risk to the stability of the Euro. Much better surely would ne to now do the right thing and seize CBR reserves in a response to the current crisis, and putting Ukraine in a position to win this war, for itself but also for Europe. That’s surely the best assurance of the international position and standing of Europe and the euro. If Ukraine loses this war, this would be a catastrophic defeat also for Europe. Fourth, maybe an added point, in that with the Trump presidency seemingly set on normalization with Russia, it might well be tempted to gift back immobilized CBR reserves to Russia. This would be a catastrophic erosion of Europe’s leverage in this war. And given that Europe has already pledge at least the interest stream from immobilized funds to cover ERA and ESL funding of Ukraine it could saddle Europe with yet another huge liability. Better move quickly now to take these funds out of the reach of both Putin and Trump. See the original in the author’s @tashecon blog here. The views expressed in this opinion article are the author’s and not necessarily those of Kyiv Post.