Deploying frozen assets for humanitarian needs? Responding to the ODA crisis

The global humanitarian system is in financial crisis. Last year, the UN Global Humanitarian overview estimated the shortfall in funding at $27 billion. This was before the Trump administration’s decision to dismantle the United States Agency for International Development (USAID), which had provided almost $11 billion of global humanitarian funding in 2024. Moreover, European governments have slashed aid budgets to respond to the threat coming from Russia and in light of the unpredictability of the US security umbrella.

Humanitarian needs, however, have not diminished. In Afghanistan, 75% of households face difficulties in meeting their most basic needs; Myanmar suffered a devastating earthquake in March 2025, compounding an already dire humanitarian situation; Libyans struggle on with a catastrophic health system, lack of education, and chronic underinvestment in essential infrastructure, leading to disasters like the Derna dam collapse in 2023; and almost one third of the population of Iran lives below the poverty line, with childhood malnutrition a growing problem.

The factor which unites these disparate humanitarian contexts is that all of these countries are subject to bilateral and multilateral sanctions. These countries, collectively, have tens of billions of dollars languishing in international banks, unable to serve the urgent needs of their citizens.

In this context of financial constraints and a significant shortfall in humanitarian contributions, it is imperative to make more effective use of frozen assets to provide for the humanitarian needs of affected populations. Frozen assets, in these contexts, are government funds or property to which access is restricted under bilateral or multilateral sanctions regimes. They cannot usually be deployed, transferred or disposed of without the authorisation of the sanctioning entity.

There is a need for a broad cross-jurisdictional humanitarian policy debate on the potential use and abuse of this powerful and innovative mechanism. Such a debate could outline key principles on the deployment of frozen funds for humanitarian purposes. Potential principles may include:

• The need for a dialogue-centred approach on the mutually acceptable use of assets, that seeks the consent of all concerned parties, including the claimants of the frozen assets and the sanctioning entity. Negotiations with alternative claimants in contexts of contested governance will be essential, and consultations with civil society are advisable to improve legitimacy and accountability.
• In most cases the capital of the frozen assets should be preserved: only interest would be deployed to either fund the projects directly or as collateral for loans.
• Multi-layered and independent management mechanisms should be created for the projects initiated with the funds, which engage all stakeholders to ensure effective and transparent use of the funds.
• Confusion between the humanitarian objectives of leveraging the frozen funds, and other security and political objectives, should be avoided.

These guidelines address some of the general objections to the use of these funds for humanitarian purposes, while acknowledging that each context may require a unique solution.

Existing practice

Previous attempts to deploy frozen assets for humanitarian purposes in Iran, Afghanistan and Venezuela have faced challenges.

Iran

In Iran, tens of billions of US dollars in payments for Iranian oil exports were effectively frozen in foreign accounts when Donald Trump imposed secondary sanctions on Iran in November 2018. In September 2023, the Biden administration negotiated a deal to transfer some $6 billion held in South Korea to Qatar for humanitarian imports to Iran. In return, Iran agreed to release five American hostages held in Iran. The US also agreed to release five Iranian nationals charged with federal crimes.

The deal would have allowed the use of effectively frozen Iranian funds for limited and mutually agreed humanitarian purposes. However, in the wake of the Hamas-led 7 October 2023 attack on Israel the deal collapsed, due to concerns that the funds would free up Iranian resources used to finance Iranian proxies.

Afghanistan

In 2022, half of the $7 billion frozen in the Reserve Bank of New York after the 2021 Taliban takeover of Afghanistan was used to establish the Swiss-based Fund for the Afghan People. The Fund’s board of Trustees is composed of two Afghan nationals, a representative of the Swiss Federal Department of Foreign Affairs and a representative of the US treasury.

The Fund’s purpose is to ‘protect, preserve, and […] disburse its assets for the benefit of the Afghan people […] by supporting Afghanistan’s macroeconomic and financial stability’. However, no disbursements have been made to date because of disagreements between the trustees, and between Taliban representatives and the US, concerning the use of the funds. The Taliban have explicitly sought to ensure that the funds would not be used for humanitarian aid. The US has further stated that the Afghan Central Bank must ‘demonstrate its independence from political influence and interference’ before funds are disbursed to it. Given that Afghan Central bank’s leadership are senior Taliban figures under individual sanctions by both the US and the UN, this seems difficult.

Venezuela

In November 2022, an agreement was reached between the Maduro regime and the Venezuelan opposition for the creation of a UN-administered fund, called the Social Protection Fund, to provide for the humanitarian needs of Venezuelans using frozen Venezuelan assets. Exact figures are impossible to determine because Venezuela claims overcompliance with US financial regulations have led to the effective freezing of several accounts that should not normally be subject to sanctions. At least $3 billion of government assets are frozen including $2 billion of gold reserves held in the Bank of England.

The agreement was mediated by the government of Norway and signed in Mexico. The agreement, however, has faced implementation challenges. These have included: identifying and releasing specific frozen assets; risks of litigation from creditors; and minimising fraud, corruption, and the attendant reputational risks to the UN.

While political and practical challenges have prevented the deployment of frozen funds for humanitarian purposes in these three cases, in the case of Russia–Ukraine challenges have been quickly overcome to leverage Russian frozen assets to provide support to Ukraine.

Russia–Ukraine

Between $300–320 billion of Russian sovereign reserves were frozen by the G7 countries plus the European Union (EU) and Australia in the aftermath of Russian’s full-scale invasion of Ukraine in February 2022. Some $200 billion was held by Euroclear, the Belgian Central Securities Depository. The interest from these frozen assets has been used to provide financial support to Ukraine. For example, a €1.4 billion payment was made in July 2024 and a €1.9 billion payment was made in April 2025 through the European Peace Facility. EU countries have since developed a more powerful mechanism to leverage the frozen Russian funds to support Ukraine: Extraordinary Revenue Acceleration (ERA) loans. The ERA loans are a $50 billion set of loans to Ukraine, backed by the anticipated interest from the Russian frozen funds.

The use of Russian frozen assets supports Ukraine, without seizing the assets or using the principal, demonstrating that frozen assets can be effectively leveraged where there is sufficient political will.

Similar creative approaches to seized and frozen assets have recently been attempted in Uzbekistan and Libya, which both offer important lessons for other contexts.

Uzbekistan

In 2012, Switzerland froze approximately $842 million during an investigation into corruption charges against Gulnara Karimova, daughter of the Uzbek dictator. Uzbekistan sought the restitution of these funds following the conviction of Karimova in 2017. In 2022, Switzerland agreed to return $131 million to Uzbekistan via a UN-administered Multi-Partner Trust Fund. A further $182 million was transferred to the fund in February 2025.

This represents a creative approach to the restitution of frozen assets, as by bilateral agreement between the two states, the funds are not directly controlled by the government of Uzbekistan but are under relatively complex oversight of the UN Multi-Partner Trust Fund. The fund has a High-Level Strategic Committee composed of a representative of Switzerland and Uzbekistan; a management committee responsible for day-to-day decision-making, which includes the UN Resident Coordinator and an administrative agent of the UN Multi-Partner Trust Fund Office in New York; and a Civil Society Advisory Council (CSAC). The CSAC is comprised of 19 independent activists from civil society and academia to play a monitoring role in project implementation, review project decisions, and ensure accountability.

This model of multi-layered governance and oversight should address concerns about the return of assets to a state with a weak history of financial transparency and accountability.

Libya

Approximately half of Libya’s $70 billion sovereign wealth fund, managed by the Libyan Investment Authority (LIA) has been frozen by the UN since 2011 in jurisdictions across the globe. While initially intended to deprive the Gaddafi regime of resources to kill civilians, since the collapse of the regime in October 2011, these sanctions have been maintained as a protective measure to prevent misuse and misappropriation and until Libya enjoys a stable government. In January 2025, the UN Security Council passed resolution 2769 allowing for the reinvestment of frozen assets in low-risk time deposits with reputable financial institutions within whatever jurisdiction in which they are currently held. While not representing the use of frozen assets for humanitarian purposes, resolution 2769 demonstrates a more sophisticated and purposeful approach to asset freezes.

This thawing of Libya’s frozen assets may lead to a more robust negotiation between the UN and LIA on other mutually acceptable uses of the frozen assets, including as collateral for humanitarian projects inside Libya.

Challenges and possible solutions

As we have seen, the mobilisation of frozen assets to support humanitarian assistance is complex and raises many challenges. Some of these challenges are specific to each individual case at the country or even asset-specific level. However, several common challenges can be highlighted.

There are concerns that any attempt to use or seize frozen assets would discourage the use of European and American banks by states and individuals who fear they will be subject to sanctions in the future. There are also concerns that the use of these assets, in some cases, may be illegal and leave banks in breach of contract. These are legitimate concerns and should discourage the effective seizure of frozen assets in all but the most dire circumstances, such as in contexts of state collapse.

However, these objections presume that assets would be used without the consent of the ‘owner’ of the frozen assets. But as was proven in Venezuela, Iran and Uzbekistan, mutually acceptable ways of deploying the assets could be found through active mediation in many cases. Thus, both the sanctioned owner and the sanctioning state or multilateral institution would consent to the deployment of the funds, mitigating concerns around seizing the assets.

In cases where the ownership of the assets is contested, for example where there has been a revolution or military coup, the consent of both claimants to ownership of the assets could be sought by mediators. Such a situation is similar to the strategy deployed by Norway in mediating the Social Protection Fund between the Maduro regime and the political opposition in Venezuela. This dialogue-centred approach could be relevant in the cases of Myanmar and Libya, where government authority is divided and contested.

More broadly, dialogue could be used to promote the transparent and accountable use of the funds. The Uzbekistan Fund provides a replicable model for managing the mutually acceptable deployment of such assets.

While negotiated and mutually acceptable use of the funds is beneficial, attempts to link the release of frozen funds to other political objectives, as in Iran where the movement of the funds was linked to the release of US hostages, are problematic and undermine both humanitarian principles and the principles undergirding the global sanctions regime. Similarly, reported plans to release Libya’s frozen funds in return for Libya resettling Palestinian refugees risks appearing like using a state’s funds as leverage for unrelated concessions. Negotiations should focus on identifying mutually agreeable domestic humanitarian projects that can be implemented in a transparent and accountable manner.

Restricting these arrangements to using the interest or profits from the frozen funds, rather than touching the principal, is another way to allay fears from would-be future investors in Western banks. Even less controversial is the option to use the frozen assets as collateral for a commercial or government-backed loan, as has been attempted with the Ukraine ERAs.

Conclusion

The current crisis in the humanitarian and development funding model requires us to think creatively about innovative funding solutions. One possible mechanism to fill these gaps in some situations is the mobilisation of frozen assets for humanitarian projects. This approach has been attempted in other contexts, notably Iran, Afghanistan, Venezuela and Uzbekistan, but not without significant challenges. However, recent practice related to the use of Russian frozen assets to provide financial support to Ukraine suggests that these challenges are not insurmountable.

Future attempts to mobilise frozen funds could increase their chances of success by adopting a dialogue-centred approach that seeks the consent of all concerned parties, and conducting consultations with civil society to ensure legitimacy and accountability of the process.

It is a sad fact that many financial sanctions remain in place for decades. It is unconscionable in the current circumstances to continue to deprive populations of opportunities to deploy funds which effectively belong to the people, and which could contribute to relieving their suffering. Humanitarian needs in the world today are too overwhelming to remain unaddressed.

Christopher Thornton is a Special Adviser at the Centre for Humanitarian Dialogue.

The author would like to thank Jeffrey Feltman, Teresa Whitfield and Jago Salmon for their comments on a draft of this paper, and David Harland, Zaid Al-Ali, Holger Spamann and Kumar Iyer for useful conversations on this topic. Many of the ideas and practical applications of this proposal have been discussed with Richard Wilcox, to whom I am greatly indebted.