The Hindu: Published on 23rd Jan 2026:
Why in News?
Russian President Vladimir Putin has announced that Russia is willing to contribute $1 billion from its frozen sovereign assets to a proposed international initiative called the “Board of Peace”, floated by former U.S. President Donald Trump.
The proposal has attracted global attention because:
The money offered is part of Russia’s frozen foreign exchange reserves,
The initiative is linked to ending the Gaza conflict and potentially other global wars,
It raises serious legal, diplomatic, and geopolitical questions,
It comes at a time when frozen Russian assets are being debated for Ukraine’s reconstruction.
Background of the Issue:
After Russia launched its military operation in Ukraine in February 2022, Western nations imposed severe economic sanctions. One of the strongest measures was the freezing of Russia’s sovereign foreign exchange reserves, estimated at nearly $300 billion.
Most of these frozen assets are:
Held in European financial institutions, particularly Euroclear (Belgium),
A smaller portion (about $5 billion) is held in the United States,
Around 11% of Russia’s total reserves were dollar-denominated.
Russia has repeatedly stated that:
The freezing of assets is illegal under international law,
The money belongs to the Russian state and cannot be confiscated,
Any attempt to use the funds without consent amounts to economic theft.
Trump’s ‘Board of Peace’ Proposal:
Donald Trump, while outlining his global peace agenda, proposed the formation of a “Board of Peace”, an international platform aimed at resolving conflicts such as:
The Gaza conflict
The Ukraine war
Other global disputes
Key features of the proposal:
Permanent members must contribute $1 billion each
The board would finance peace-building, reconstruction, and humanitarian relief
It is designed as a multi-country diplomatic platform
Russia received an invitation to join this initiative, and President Putin expressed conditional willingness to participate.
Putin’s Offer and Its Significance:
During discussions with Palestinian President Mahmoud Abbas, Putin stated that Russia could provide $1 billion from its frozen assets for Gaza’s reconstruction.
He justified this move by:
Citing Russia’s “special relationship with the Palestinian people”
Emphasizing humanitarian responsibility
Linking it to global peace efforts
However, the Kremlin clarified that:
The money cannot be transferred unless the U.S. unfreezes the assets
Russia still considers the freeze illegal
Legal and procedural issues must be resolved first
Legal and Financial Complications
The proposal faces major legal obstacles:
Sovereign Immunity
International law protects a country’s reserves from seizure.
Using frozen assets without consent violates established norms.
Jurisdictional Control
Dollar-denominated assets are held in U.S. institutions.
Any transfer requires American legal approval.
Ongoing Legal Disputes
Russia has filed a $230 billion lawsuit against Euroclear.
The EU is considering laws to use frozen Russian assets for Ukraine’s reconstruction.
Precedent Risk
If allowed, it could encourage future seizures of state assets during conflicts.
Could weaken trust in Western financial systems.
Geopolitical Implications:
For Russia
Attempts to reframe itself as a peace facilitator
Tries to gain diplomatic leverage amid isolation
Seeks to influence the Gaza narrative
Aims to regain partial control over frozen funds
For the United States
Faces a dilemma between:
Supporting humanitarian efforts
Maintaining sanctions on Russia
Trump’s involvement adds political complexity
For Europe
Euroclear holds most frozen assets
Any decision affects EU unity and legal credibility
Risk of retaliation from Russia
For Ukraine
Russia has hinted that frozen assets could be used for reconstruction,
but only if some funds are spent in Russian-controlled territories.
This complicates Western plans to fully redirect assets to Ukraine.
Strategic Dimensions:
Russia is using financial diplomacy as a tool of influence.
The offer places moral pressure on the West:
Rejecting it could appear anti-humanitarian
Accepting it could weaken sanctions
Highlights the weaponization of finance in modern geopolitics.
Reflects the growing trend of economic tools replacing military tools in diplomacy.
Challenges and Concerns:
Legal uncertainty regarding asset ownership
Risk of legitimizing territorial occupation
Weakening of international sanctions regime
Political misuse of humanitarian initiatives
Possibility of diplomatic deadlock
Way Forward:
Clear international legal framework for frozen sovereign assets
Multilateral consensus on use of such funds
Separation of humanitarian aid from geopolitical bargaining
Strengthening global financial governance
Ensuring that peace initiatives remain neutral and inclusive
Conclusion:
Putin’s offer to use frozen Russian assets for Trump’s “Board of Peace” reflects a complex mix of diplomacy, legal maneuvering, and geopolitical strategy. While presented as a humanitarian gesture, the proposal raises serious questions about international law, asset sovereignty, and the future of sanctions as a global tool. The episode underscores how economic power, diplomacy, and conflict resolution are increasingly intertwined in today’s multipolar world.
