Newsletter of the main news 10.02/16.02

1️⃣ Frozen Russian assets

Ukraine has approached the administration of US President Donald Trump with a proposal to use frozen Russian assets worth $300 billion to purchase US weapons. This idea was discussed at meetings between Ukrainian representatives, allies and Trump's team, but there is no confirmation that he supports it. The issue of asset confiscation was raised during Joe Biden's presidency, but some European countries oppose it due to possible financial and legal risks. At the same time, Ukrainian officials consider this step to be economically and legally justified, as it could cover the cost of US military assistance.

The Ukrainian government has set up an interagency working group to deal with the use and recovery of frozen and confiscated Russian assets for the benefit of the country. Prime Minister Denys Shmyhal stressed that these funds should be used to rebuild and strengthen the state. Work is also underway to establish an International Compensation Mechanism. One of Ukraine's key financial resources - $50 billion secured by the proceeds of frozen assets - is expected to be received this year.

For the first time since the beginning of the invasion, Ukraine has a reserve of external assistance for at least a year ahead. The $50 billion ERA programme, which is made up of frozen Russian assets, will fully cover the $38 billion budget deficit in 2025. The Verkhovna Rada is considering three options for allocating the additional funds: allocating all $25 billion to security and defence, postponing part of it until 2026, or using $5-7 billion this year. The MPs also emphasise that funding for the army cannot be reduced, so a significant portion of the funds will likely go to military needs.

2️⃣ Sanctions, their violation and circumvention

The G7 foreign ministers agreed to align future sanctions against Russia with its participation in peace talks to end the war in Ukraine. They stressed that new restrictions after February would depend on Moscow's real and good faith efforts to end its aggression. The G7 countries also reaffirmed their readiness to work together to achieve a lasting peace and provide Ukraine with reliable security guarantees to prevent a recurrence of the war. The initiative was supported by US Secretary of State Marco Rubio.

Switzerland has fully joined the 15th package of EU sanctions against Russia, and the new restrictions will come into effect on 13 February. The Federal Council has decided to ban the recognition and enforcement of certain Russian court rulings relating to disputes between Russian and Swiss companies to protect businesses from financial risks. Earlier, 54 individuals and 30 legal entities were added to the Swiss sanctions list. The sanctions also provide for a mechanism that allows Swiss companies to gradually withdraw their investments from Russia.

The UK has tightened sanctions against Russia by adding senior officials and strategic companies to the list of restrictions. The sanctions include Russian Deputy Defence Minister Pavel Fradkov, Artem Chaika, son of former Prosecutor General Yuri Chaika, and Director of the Federal Service for Technical and Export Control Vladimir Selin. In addition, restrictions were imposed on the Kirov-Energomash plant and Rosatom Additive Technologies. The British government explained this move by saying that they benefit from or support the Russian government by operating in strategically important sectors.

President Volodymyr Zelenskyy discussed with President of Finland Alexander Stubb the strengthening of sanctions against Russia's shadow fleet and coordination with allies. They also discussed defence support for Ukraine and investments in the production of long-range weapons. Zelenskyy shared the details of his talks with the new US administration and European leaders, stressing the importance of working together on reliable security guarantees. He thanked Finland for its steadfast support and efforts to end the war.

Economic sanctions against Russia are rated at 6 out of 10, but their effectiveness remains low due to implementation problems, said Donald Trump's spokesman Kellogg. Restrictions on oil products have the most significant impact, but Russia circumvents them through a shadow fleet, especially in the Baltic Sea. He stressed the need for a comprehensive approach that would create constant economic pressure, in particular by analogy with the US sanctions against Iran. Kellogg also noted that Russia is already feeling the effects of sanctions, including by engaging the North Korean military, which is evidence of its losses.

China is helping Russia circumvent Western sanctions and supplying components for drones, according to Estonian intelligence. According to the report, about 80% of such parts come to Russia from China, and about 60% of foreign components in Ukrainian weapons captured on the battlefield came through Chinese channels. China is the main supplier of high-tech and dual-use products, using private companies. The intelligence community notes that Russia has no domestic alternatives for such spare parts, and long-term cooperation with China could reduce Western influence on Russia's defence sector.

Advisor to the President of Ukraine Vladyslav Vlasiuk discussed with Irish Ambassador Jonathan Conlon the strengthening of sanctions against Russia and control over the circulation of dual-use goods. Ukraine and Ireland agreed to continue their cooperation to prevent critical components from reaching Russia bypassing sanctions. The parties also reviewed Ireland's proposals to the 16th EU sanctions package, in particular on restrictions in the Russian energy sector and the fight against the shadow fleet. Particular attention was paid to the investigation into the supply of Irish-made components, and Dublin has already taken steps to strengthen control in this area.

Dozens of Russian oligarchs were able to get sanctions lifted by proving that they had severed ties with Russia, changed their place of residence and were not doing business in Russia. Among them are Dmitry Pumpyansky and his family, the son of Uralchem owner Nikita Mazepin, and former heads of large companies such as Dmitry Konov, Vladimir Rashevsky and Alexander Shulgin. The sanctions were also lifted from some relatives of influential businessmen, including the mother of Violetta Prigozhina, the founder of the Wagner PMC. In 2023, the former head of Yandex, Arkady Volozh, was removed from the sanctions list after making a public anti-war statement. In addition, Canada lifted restrictions on several former Sberbank executives.

3️⃣ Sanctions policy of Ukraine

The Appellate Chamber of the HACC upheld the decision to seize the assets of Russian billionaire Mikhail Shelkov and PJSC VSMPO-AVISMA Corporation in favour of the state. The decision was made on 12 February 2025 and concerns the claims of companies controlled by Shelkov to Demurinsky Mining and Processing Plant LLC in the amount of approximately $29 billion and UAH 7 million.

This is not the first time his assets have been confiscated in Ukraine. In 2023, the court already transferred to the state 100% of stakes in several Ukrainian companies, including VSMPO TITAN Ukraine and Demurinsky Mining and Processing Plant, along with their property and accounts. The Ministry of Justice continues to work to stop the activities of those involved in financing Russia's aggression.