How Canada plans to use Russian cash to help fund Ukraine’s war effort

A new idea has emerged in G7 capitals in recent years — using the cash in frozen Russian accounts, or interest earned on those accounts, to help fund Ukraine's defence.

Canada is set to take its first steps toward expropriating assets held by the Russian government and sanctioned Russian citizens to help fund Ukraine’s war effort — measures that could test the limits of international law.

Ottawa is promising action soon, after years of leading an international push to use Moscow’s own financial holdings to help Ukraine respond to the full-scale invasion Russia launched in February 2022.

“Canada is really at the forefront of this,” said William Pellerin, an Ottawa-based trade lawyer with the firm McMillan LLP who has advised clients on navigating Ottawa’s sanctions on Russia.

Western countries have moved to isolate Russia by, among other things, sanctioning those accused of helping the war continue or profiting from it.

States tend to sanction individuals and freeze their accounts in order to change their behaviour. But a new idea has emerged in G7 capitals in recent years — using the cash in frozen accounts, or interest earned on those accounts, to help fund Ukraine’s defence.

Proponents of the idea say it offers a cheaper way to help Ukraine push back the Russians and rebuild its damaged infrastructure.

They also hope inflicting financial pain on Russia can convince it to stop or slow its deadly airstrikes, and deter other countries from launching similar wars.

But critics warn such a move could violate international law and give adversaries an excuse to steal private property.