Afraid Trump May End Freebies, Ukraine to "Buy" Weapons from Frozen Russian Assets

Ukrainian President Volodymyr Zelensky has proposed using $300 billion in frozen Russian assets to purchase American weapons, marking a move away from dependence on U.S. financial aid.

Zelensky shared this proposal during an interview with American podcaster Lex Fridman, published on Jan. 5.

"Take the money, what we need for our interior production, and we will buy all the weapons from the United States. We don't need gifts from the United States," he stated, adding that the funds, confiscated from Russia, would directly benefit U.S. industry while ensuring Ukraine's security.

This proposal comes amid concerns that U.S. President-elect Donald Trump might reduce or halt aid to Ukraine, given his critical stance on American spending abroad. Michael Waltz, set to serve as Trump's National Security Advisor, reinforced this perspective in December, describing prior U.S. support as "a blank check."

Despite skepticism, recent reports suggest that Trump may not entirely withdraw military support. Zelensky has made visible efforts to build rapport with Trump, meeting him twice in recent months, including during the reopening of Notre Dame Cathedral in Paris.

The relationship between the two leaders has evolved since Trump's 2019 impeachment trial, which involved allegations related to Ukraine. Zelensky, reflecting on Trump's recent electoral victory, described him as "strong" and "young," predicting that the war in Ukraine could end sooner under Trump’s administration.

The use of frozen Russian assets aligns with Zelensky's broader strategy to end the war diplomatically by 2025, while simultaneously strengthening Ukraine's defense capabilities.

The U.S. and European Union have faced challenges in deciding how to utilize $300 billion in Russian central bank assets frozen since the start of the Ukraine conflict. While Washington sought to use the funds directly for Ukraine, legal concerns in Brussels prevented outright spending.

After prolonged negotiations, G7 leaders agreed in mid-2024 to use interest generated from the frozen assets—estimated at a few billion dollars annually—as collateral for a one-time $50 billion loan to Ukraine. This plan avoids touching the $300 billion principal but presents challenges, as it requires the assets to remain frozen for up to 20 years.

Ukraine reportedly faces a significant fiscal deficit of 20-30% of GDP, requiring $100-150 billion annually to sustain its war effort and domestic needs. International support has been inconsistent, with delays in U.S. funding and disparities in aid commitments from other countries.

Critics argue the long-term freezing of assets could hinder Ukraine's reconstruction, as the principal may not be accessible when needed. However, the compromise provides immediate financial relief and secures aid against potential shifts in U.S. policy, particularly amid uncertainties surrounding the 2024 presidential election.

Ukraine plans to increase taxes to address funding shortages, while Russia is also raising taxes to sustain its war effort. Analysts warn that Russia may face severe budget constraints within two years, emphasizing the need for decisive action on the frozen funds.

The $50 billion loan offers temporary relief but underscores the ongoing need for substantial international aid to rebuild Ukraine’s damaged infrastructure and economy.