Under the draft Act, frozen Russian assets will remain frozen until war damages have been compensated. The implementation of the mechanism requires an international agreement with Ukraine or an international compensation mechanism.

At the time of writing, Estonia is estimated to have €38 million worth of assets frozen under international sanctions. 

The draft will now be sent to the Riigikogu for members of parliament to discuss. It must then be voted into law.

Prime Minister Kaja Kallas (Reform) said it is very important to raise the price of aggression for Russia.

"We need to find ways to make Russia financially responsible for the damage caused to Ukraine. The draft Act that the government sent to parliament today will allow assets of sanctioned persons which have been frozen in Estonia to be used to compensate Ukraine for war damage. We need to set an example and encourage other European countries to introduce similar regulations. Russia must compensate Ukraine for all the war damage it has caused," Kallas in a statement.

"We also want the European Union to complete its process of mobilizing frozen Russian assets and developing practical solutions as soon as possible," she added.

Minister of Foreign Affairs Margus Tsahkna (Eesti 200) said he hoped the draft would be discussed in the parliament as soon as possible.

"The money to compensate for the damage caused by Russia in Ukraine should not only come from the pockets of taxpayers in other countries," he said.

"Depriving the citizens of the aggressor state who have contributed to the aggression of their assets outside their home country is justified because after more than 80 years, a war is taking place in the heart of Europe that will determine the European security architecture for a long time to come. Punishing any individual who contributes to this aggression can also ultimately influence the political leadership or the people of the aggressor state to comply with international law."

Of the tens of millions of frozen assets in Estonia, over 90 percent are tied to two Russian oligarchs – Andrei Melnichenko and Vyacheslav Kantor.

The former owns the chemical manufacturing company Eurochem in Sillamäe and the latter the DBT cargo terminal in Muuga. A network of affiliated companies branches out from the two.

The Money Laundering Data Bureau's international sanctions and anti-terrorism funding arm said that it is almost impossible to calculate the exact value of frozen assets.

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