EU to lock up Russian assets so Hungary and Slovakia can’t block use for Ukraine

The European Union is expected to lock up Russia’s assets held in Europe until it ends its war in Ukraine and compensates its neighbour for the damage it has inflicted for almost four years.

The move would allow EU leaders to work out at a summit next week how to use the tens of billions of euros in Russian Central Bank assets to underwrite a huge loan to help Ukraine meet its financial and military needs over the next two years.

Hungarian Prime Minister Viktor Orban – Russian President Vladimir Putin’s closest ally in Europe – accused the European Commission, which prepared the decision, “of systematically raping European law”.

A total of 210 billion euros (£184 billion) in Russian assets are frozen in Europe. The vast majority — around 193 billion euros (£169 billion) at the end of September — is held in Euroclear, a Belgian financial clearing house.

The money was frozen under sanctions the EU imposed on Moscow over the war it launched on February 24 2022, but the sanctions must be renewed every six months, and all 27 member countries must approve them.

Hungary and Slovakia oppose providing more support to Ukraine.

Friday’s expected decision, based on EU treaty rules allowing the bloc to protect its economic interests in certain emergency situations, would prevent the two countries from blocking the sanctions rollover and make it easier to use the assets.

Mr Orban said it means “the rule of law in the European Union comes to an end, and Europe’s leaders are placing themselves above the rules”.

“The European Commission is systematically raping European law. It is doing this in order to continue the war in Ukraine, a war that clearly isn’t winnable,” he wrote.

He said Hungary “will do everything in its power to restore a lawful order”.

In a letter to European Council president Antonio Costa, who will chair the summit starting on December 18, Slovakian Prime Minister Robert Fico said he would refuse to back any move that “would include covering Ukraine’s military expenses for the coming years”.

He warned that “the use of frozen Russian assets could directly jeopardise US peace efforts, which directly count on the use of these resources for the reconstruction of Ukraine”.

But the commission says the war has imposed heavy costs by hiking energy prices and stunting economic growth in the EU, which has already provided nearly 200 billion euros (£175 billion) in support to Ukraine.

French Foreign Minister Jean-Noel Barrot described the expected move as “a major decision that will undoubtedly influence the course of the war and accelerate peace”.

“Because Europeans do not want to let anyone else decide for them … we have decided to lock those sums (assets) for as long as necessary,” Mr Barrot said on France Info news broadcaster.

The decision would also prevent the assets from being used in any way without European approval.

A 28-point peace plan drafted by US and Russian envoys stipulated that the EU would release the frozen assets for use by Ukraine, Russia and the United States.

That plan was rejected by Ukraine and its backers in Europe.

Belgium, where Euroclear is based, is opposed to the “reparations loan” plan. It says that the plan “entails consequential economic, financial and legal risks”, and has called on other EU countries to share the risk.

Russia’s Central Bank, meanwhile, said that it has filed a lawsuit in Moscow against Euroclear for damages it says were caused when Moscow was barred from managing the assets. Euroclear declined to comment.

In a separate statement, the Central Bank also described wider EU plans to use Russian assets to aid Ukraine as “illegal, contrary to international law,” arguing that they violated “the principles of sovereign immunity of assets.”