Key Points – The Western strategy of freezing over $300 billion in Russian foreign exchange reserves to fund Ukraine’s war effort has proven to have limited effectiveness and is now facing Russian retaliation.
-While Ukraine has received billions in loans and interest generated by these frozen assets, Russia is preparing reciprocal measures.
-Russia’s Duma is reportedly advancing legislation to seize a similar amount of Western assets held in Russian “Type C” accounts.
-This tit-for-tat economic warfare has not altered Vladimir Putin’s maximalist demands for ending the war, and some argue the sanctions have ultimately failed to cripple Moscow’s war machine or intimidate its leadership.
Have Western Financial Sanctions Against Russia Been Effective?
One way to punish Russia after its invasion of Ukraine and its relentless attacks on cities to kill and maim civilians has been to freeze its financial assets. The United States and its allies have taken Russian foreign exchange reserves to the tune of more than $300 billion around the world since the beginning of the war in February 2022. The idea was to seize that money and grant it or loan it to Ukraine to finance its war effort.
The Allied ‘Economic Toolkit’ Has Been Blunted
This so-called “economic tool kit” is in danger as United States President Donald Trump works toward some form of ceasefire and armistice. The White House doesn’t want to antagonize Russia as it pursues negotiations.
The entity behind these financial sanctions is called the Russian Elites, Proxies, and Oligarchs Task Force—made up of the Group of Seven countries, the European Union, and Australia.
Euroclear, a central depository in Belgium, holds 90 percent of the frozen assets, with the remaining 10 percent retained by France and the United States.
Ukraine Was Supposed to Have Been Granted or Loaned the Seized Assets
These are mostly bonds that have been converted to currency. Euroclear has received around $7 billion in interest from the cash. A percentage of those interest earnings, $4 billion, has been given to Ukraine. In 2024, the G7 and EU also loaned Kyiv $50 billion. Other allies pitched in about $23 billion.
In return, Moscow is naturally fighting mad and says it will take Western assets invested in Russia. The Kremlin relishes this task because it believes that the United States and its partners will suffer significantly from the act. Vladimir Putin and his cronies have alleged the G7 and the EU have conducted “banditry” against their country and that there will be serious revenge for the asset seizures, loans, and monetary gifts to Ukraine.
Russia Takes Revenge Against U.S.-Led ‘Bandits’
Russia has been cagey about the amount of money it wants to take from Westerners and other allies, but it could be a similar amount to the $300 billion the Kremlin lost to Euroclear. The Russian money the group seized is placed in “Type C” accounts.
“Payouts on blocked assets in Type-C accounts could start to be seized in favor of the state,” Vladimir Yazev, investment portfolio lead at investment company Aigenis, told Reuters. “Additionally, the government may consider measures to block non-exchange assets still held by unfriendly countries. These assets include taxes, grants, and private donations.”
Now, there is new legislation from Russia’s Duma that would institute harsher blocking of Western assets. This blockade is a reciprocal move if passed by the lower chamber of parliament, that aims to punish the United States and its partners, which Moscow calls “unfriendly states,” with Russia’s own claims of $300 billion. The bill would widen the target to even more countries, such as Japan and Australia, if passed by the Duma, which is a rubber-stamp body for Putin that lacks legitimacy.
Putin and Russian lawmakers think that the asset seizures they suffered violate international law. Since they were the victims first, the Duma has every right to give the West, Japan, and Australia a taste of their own medicine. Russia may have decided to absorb its losses at the beginning of these sanctions, but it has woken up and is pursuing its own toolkit of economic vengeance.
Sanctions Have Largely Failed
I am not a fan of economic sanctions. They have not modified Putin’s war crimes, and now his government could claw back some money for its own coffers. Lending Ukraine funds from the largesse was a good idea, but it has been limited in scope and efficacy. The Ukrainians will need more than the $61 billion offered to rebuild the country after the war.
The trade embargo and export controls haven’t been particularly effective either. Russia’s allies, such as China, routinely ship dual-use technologies to Moscow to enhance the war effort. Financial sanctions are used by countries unwilling to use military might but want to “do something” beyond mere rhetoric or strongly worded resolutions that have no teeth.
Additionally, sanctions can be tit-for-tat and exacerbate tensions further, with individual investors bearing the brunt and losing their hard-earned money that could be invested elsewhere. Russia views this as a means to replace funds lost and has already recovered from financial sanctions since the war began.
Russia Can Fight On Despite Financial Pain
Plus, the Kremlin has adjusted to financial sanctions since Putin ordered Crimea annexed in 2014. It has been a big pill to swallow, but Russia has been undeterred in its warmaking.
Moscow has recently said it won’t end the war unless NATO troops are removed from the Baltics. This is anathema to the alliance, and Putin will eventually call for Estonia, Latvia, and Lithuania to withdraw from NATO altogether before he agrees to further peace talks. Financial sanctions have not intimidated Putin in the slightest. If anything, the economic tool kit has only sharpened Russian resolve.
Now, Russia may grab Western assets to return the favor. The country hasn’t been serious about peace talks. It is making more threats against NATO countries and continues to attack Ukrainian cities with drones and ballistic missiles. It is time for the United States and its allies to either grant and loan more money to Ukraine or continue to save it for reconstruction after the war, but that could take a long time before the country recovers from the worst conflict in Europe since World War Two.
About the Author: Dr. Brent M. Eastwood
Brent M. Eastwood, PhD is the author of Don’t Turn Your Back On the World: a Conservative Foreign Policy and Humans, Machines, and Data: Future Trends in Warfare plus two other books. Brent was the founder and CEO of a tech firm that predicted world events using artificial intelligence. He served as a legislative fellow for U.S. Senator Tim Scott and advised the senator on defense and foreign policy issues. He has taught at American University, George Washington University, and George Mason University. Brent is a former U.S. Army Infantry officer. He can be followed on X @BMEastwood.
More Fighters
China’s J-20 Stealth Fighter Looks Like a Powerhouse
China’s White Emperor Space Fighter Looks Fake
China’s Aircraft Carriers Have Arrived (Just Not Nuclear Carriers)
Doyle
June 14, 2025 at 5:15 am
Sanctions are like the forced or compelled fasting culture or culture of compulsory fasting practiced in certain countries.
Those who get caught not fasting are fined, jailed or caned. Even those who sold food to the guilty are punished as well.
So, the practice of enforcing sanctions is like the practice of enforcing fasting.
But some countries that have been hit hard by sanctions are actually doing well, like north Korea. Cuba and iran, too.
The global events particularly the big havoc and bloody chaos that occurred during joe biden’s time are now being continued or even amplified under Donald trump.
So, who should be hit by sanctions. US and minions.
US and minions, despite being self-styled champions of human rights and human freedoms are directly responsible for the daily human slaughter in gaza, the continued killings in Donbass and elsewhere.
Human rights and human freedoms indeed.
Pingback: The Real Winner in the War Between Israel and Iran: Russia - National Security Journal
Pingback: Russia Just Made a Threat to Attack the West over Ukraine War - National Security Journal