Western analysts consider the confiscation of Russian assets a short-sighted decision and offer an alternative option.

As The Hill explains, confiscation makes little sense because, First, confiscation of assets reverts government bonds to the issuers, which would automatically void the West’s obligation to redeem sovereign debt and is equivalent to fiscal default.

Second, confiscation sets a fiduciary trap. It forfeits the future for the present. Money hastily spent today in order to circumvent political opposition will not be available for Ukraine’s reconstruction after the war ends.

An alternative solution is to create a “Russian Trust Fund” and consolidate all frozen assets under the a guardian appointed by Western governments. It is also necessary to involve the Russian Central Bank through proxies to ensure accountability. This fund would become a depository and loan pool of last resort, providing short-term loans to Western governments in order to finance Ukraine.

At the same time, Western governments and Ukraine could jointly establish the Fund for the Reconstruction of Ukraine, which would file a lawsuit against the Russian trust fund and demand payment of war reparations.