Hungary Rejects Extension of Frozen Russian Assets

Hungary’s foreign minister says changing sanctions-renewal rules would imply the EU expects the Ukraine conflict to last for years

Budapest has rejected a proposed three-year extension of the EU’s freeze of Russian assets, arguing that such a move would signal the bloc’s expectation of the Ukraine conflict lasting for another three years, according to Hungarian Foreign Minister Peter Szijjarto.

The minister’s comments come as officials in Brussels explore ways to amend the EU’s sanctions rules to ensure repayment of a $50 billion loan to Ukraine agreed by G7 members in June.

During a September visit to Kiev, European Commission President Ursula von der Leyen stated that the EU would contribute €35 billion ($38 billion) to the $50 billion G7 loan for Ukraine.

In June, the US and the EU established a mechanism allowing for the repayment of the loan using interest generated from frozen Russian Central Bank funds. The EU’s sanctions are renewed every six months through unanimous decision, potentially leading to breaks in restrictions. Washington has expressed concerns about the reliability of this windfall earnings flow.

One of the proposed solutions, reportedly favored by many EU members, involves extending the sanctions-renewal timeframe from six months to 36 months. This modification, if approved, is expected to take effect in January 2025.

During a Thursday hearing of the European Parliament’s Foreign Affairs Committee, Szijjarto voiced Hungary’s opposition to this proposal.

We do not support it because it means that, as some people think, the war in Europe will continue for three years. And this approach is unacceptable to us,” he explained.

Szijjarto, along with other prominent Hungarian officials, has consistently criticized the West’s approach to the Ukraine crisis, calling for a ceasefire and peace talks between Moscow and Kiev. He has also condemned Western sanctions against Russia as ineffective and detrimental to the EU economy.

Following the outbreak of fighting between Moscow and Kiev in February 2022, the EU froze over €200 billion ($217 billion) in Russian Central Bank assets. Russia has denounced this move as “theft.” As of mid-July, these immobilized assets have generated €3.4 billion ($3.7 billion) in interest, according to Euroclear, a Brussels-based central securities depository holding most of Russia’s funds.

Moscow has repeatedly asserted that any seizure of its funds would be illegal and would further erode global trust in the Western financial system.