With Ukraine losing ground, allies debate how to squeeze cash for Kyiv out of frozen Russian assets

Ukraine's allies are wrestling with how to squeeze money out of frozen Russian assets to support Kyiv's war effort, a debate that is ever more urgent as Russia gains territory on the battlefield and as the outlook for Ukraine’s state finances looks shakier.

What to do with the Russian central bank reserves frozen in response to the invasion of Ukraine is at the top of the agenda as finance officials from the Group of Seven rich democracies meet Thursday through Saturday in Stresa, Italy, on the shores of scenic Lago Maggiore.

The issue: While Ukraine and many of its supporters have called for the confiscation of $260 billion in Russian assets frozen outside the country after the February 24, 2022, invasion, European officials have resisted, citing legal and financial stability concerns. Most of the frozen assets are located in Europe.

Yet a European plan to merely use the interest on the Russian funds would provide only a trickle of money every year — some $2.5 billion-$3 billion at current interest rates. That would barely meet a month's financing needs for the Ukrainian government.

U.S. Treasury officials and outside economists are proposing ways to turn that annual trickle into a much larger chunk of upfront cash. That could done be through a bond that would be repaid by the future interest income, giving Ukraine the money immediately. The ministers meet with Ukrainian Finance Minister Sergii Marchenko on Saturday.

U.S. Treasury Secretary Janet Yellen said during a speech Monday in Frankfurt, Germany, that “it’s vital and urgent that we collectively find a way forward to unlock the value of Russian sovereign assets in our jurisdictions for the benefit of Ukraine.”

The debate is being revived after President Joe