EU Freezes Russian Assets Indefinitely to Prevent Vetoes from Hungary and Slovakia in Support of Ukraine

The European Union has indefinitely frozen Russian assets in Europe to ensure they can be used to support Ukraine, preventing Hungary and Slovakia from blocking their use. This decision aligns with the EU's commitment to aid Ukraine amid ongoing conflict.

The European Union has indefinitely frozen Russian assets in Europe, aiming to prevent Hungary and Slovakia from blocking their use to support Ukraine. This decision, made using a special economic emergency procedure, will keep the assets immobilised until Russia ends its conflict with Ukraine and compensates for the damages caused.

EU Council President Antonio Costa stated that European leaders had pledged in October to maintain the freeze on Russian assets until Russia ceases its aggression against Ukraine and compensates for the damage. "Today we delivered on that commitment," he said. This move is crucial for EU leaders as they plan to discuss using Russian Central Bank assets to support Ukraine financially and militarily over the next two years at an upcoming summit.

Hungary and Slovakia's Opposition

Hungary and Slovakia have expressed opposition to further supporting Ukraine. However, the EU's decision prevents them from blocking the renewal of sanctions, which must be approved every six months by all 27 member countries. Hungarian Prime Minister Viktor Orban criticised the decision, claiming it undermines the rule of law in the EU and places leaders above established rules.

Slovak Prime Minister Robert Fico also voiced his disapproval, stating he would not support any move that includes covering Ukraine's military expenses in the coming years. He warned that using frozen Russian assets could jeopardise US peace efforts, which rely on these resources for Ukraine's reconstruction.

Legal Challenges from Russia

Russia's Central Bank has filed a lawsuit in Moscow against Euroclear, a Belgian financial clearing house, for damages resulting from being barred from managing its assets. Euroclear holds approximately 17 billion euros in Russian assets. The outcome of this legal challenge remains uncertain.

The Central Bank also criticised broader EU plans to use Russian assets to aid Ukraine as illegal and contrary to international law. It argued that these plans violate the principles of sovereign immunity of assets. However, EU Economy Commissioner Valdis Dombrovskis dismissed these claims, asserting that the decision is legally sound.

Implications for EU and Russia

The majority of the frozen funds, around 193 billion euros, are held in Euroclear. The sanctions imposed on Russia following its invasion of Ukraine on February 24, 2022, require renewal every six months with unanimous approval from all EU member states. Belgium has opposed the "reparations loan" plan due to potential economic, financial, and legal risks.

Chris Weafer, CEO of Macro-Advisory Ltd., noted that Russia's legal actions are clearly linked to the EU's intention to use frozen assets. He stated that Russia is likely to continue pursuing legal proceedings against countries involved in this decision.

The EU's decision came shortly after Germany summoned the Russian ambassador in Berlin over allegations of sabotage, disinformation campaigns, cyberattacks, and election interference. These developments highlight ongoing tensions between Europe and Russia amid the ongoing conflict in Ukraine.

With inputs from PTI