Orban outraged by the lifetime freeze of €210 billion in EU assets

When the "veto power" ends: how the EU decision on Russian assets drove Orban crazy

The European Union agreed to indefinitely freeze about 210 billion euros in assets of the Russian Central Bank, effectively taking away from Hungary and Slovakia the ability to block the extension of sanctions every six months.^{1 3}For Viktor Orban, this was a blow to his main tool of influence over Brussels: the Hungarian Prime Minister called the decision “the end of the rule of law in the EU” and “the dictatorship of Brussels,” accusing the European Commission of “systematic violation of European law” in order to continue the “lost war in Ukraine.”^{1 11}.

What the EU decided: a freeze without an end date and new rules of the game

On December 12, EU ambassadors approved a decision to indefinitely "immobilize" approximately 210 billion euros of Russian sovereign assets frozen on the territory of the Union after the start of full-scale aggression against Ukraine.^{2 3}Previously, sanctions against these assets had to be extended every six months by a unanimous vote of all 27 states, which gave Budapest and Bratislava the opportunity to blackmail the EU with threats to block the extension.^{3 9}Now, using the emergency Article 122 of the Treaty on the Functioning of the EU, the leaders have agreed: the assets will remain frozen until Russia stops the war and compensates for the damage caused, and the decision on a possible unblocking will be made by a qualified majority, without the right of veto of individual countries.^{3 10}.

The European Commission's explanatory memorandum states that such a "long-term consolidation" of the freeze is necessary to protect the EU's economic interests: the Russian Federation's war against Ukraine has caused a jump in energy prices, inflation, and a slowdown in growth, and therefore Brussels considers it logical not to allow the aggressor to regain access to hundreds of billions of euros in reserves.^{3 10}In fact, it is about transforming the temporary sanctions regime into a strategic lever – the basis for a future “reparation loan” in favor of Ukraine.

Why Orban is outraged: the end of the "six-month blackmail"

Both Budapest and Bratislava have regularly used the unanimity requirement in recent years to block or delay decisions on Ukraine – from sanctions packages to macro-financial assistance.^{1 11}The Hungarian prime minister openly linked his agreement to receiving financial and political bonuses for Budapest, and his veto on individual decisions became a chronic problem for the EU.^{11 1}That is why the decision to take away his opportunity to question the extension of the freeze on Rosactives once every six months caused such a sharp reaction.

On Facebook, Orban said that "Brussels is crossing the Rubicon today" and that the European Commission "with one stroke of the pen is abolishing the unanimity requirement," calling it "unequivocally illegal."^{11 1}He claims that this is about “the destruction of the rule of law in the EU” and that the leaders of the Union are “putting themselves above the rules” in order to “continue the war in Ukraine, which is clearly lost.”^{11 1}Such formulations are not new for the Hungarian prime minister, but now they are uttered against the backdrop of a concrete defeat: the Hungarian veto is no longer able to unfreeze Russian money.

How exactly the veto was bypassed: Article 122 and the "economic emergency"

Legally, the EU has invoked Article 122 of the Treaty, which allows the Council to act by qualified majority in the event of serious energy supply disruptions or other exceptional economic circumstances.³This mechanism has already been used during the COVID-19 pandemic and the 2022 energy crisis, and now it has been applied to the issue of frozen Russian assets: according to Brussels' logic, unblocking these funds before the end of the war would create unacceptable risks for the EU economy.^{3 10}Therefore, the freeze was transferred from the plane of "sanctions that need to be continued" to the plane of "economic protection of the Union."

In practice, this means that a decision no longer requires the approval of all 27 states; the support of at least 15 countries, which together represent at least 65% of the EU population, is sufficient.³It is this moment that Orban calls a “usurpation of power,” although formally the European Commission and the Council refer to previously adopted political conclusions of the European Council: the assets should remain frozen until Russia pays reparations to Ukraine.^{3 10}.

What are these assets: 210 billion euros under lock and key

According to estimates by the European Commission and the media, about 210 billion euros of assets of the Central Bank of the Russian Federation are blocked in the EU, most of which - about 185 billion - are concentrated in the Belgian clearing center Euroclear, and about 25 billion more - in banks in France, Germany, Sweden and Cyprus.^{1 3}Previously, these funds were subject to sanctions, which had to be extended each time, but the assets themselves formally remained “frozen, not confiscated.”^{3 9}Now their status has become stricter: the EU explicitly prohibits returning them to the Russian Central Bank until the conditions for ending the aggression and paying compensation to Ukraine are met.^{3 10}.

The Russian Central Bank has already called the decision “illegal” and one that violates the principle of immunity of sovereign assets, declaring its readiness to “protect its interests by all available means.”^{3 9}. Moscow is pursuing legal action against Euroclear, although for Brussels these processes are more of a legal headache than a real threat of unfreezing funds in the near future.³At the same time, it was Belgium – as the country where the lion's share of the assets are concentrated – that insisted on clear rules and a long-term freeze before agreeing to broader plans for using this money for Ukraine.^{3 9}.

Does an indefinite freeze mean automatic confiscation?

Important detail: the current EU decision is not a complete confiscation of Russian assets, but only a "long-term immobilization"^{2 3}Formally, the Central Bank of the Russian Federation remains the owner of the funds; the control regime changes: Russia cannot get them back without a separate EU decision, approved by a qualified majority, and only after fulfilling the conditions for ending the war and making reparations.^{3 10}This is an important legal nuance that allows Brussels to claim that it is acting within the framework of international law without currently resorting to confiscation as such.

However, the political goal is clear: to create a basis for a future “reparation loan”, when, under the guarantees of these assets, the EU and partners will be able to attract up to 150–165 billion euros to finance Ukraine’s needs in 2026–2027.^{2 9}. Discussions about confiscation are ongoing; a number of countries – from the Baltic states to Poland – are advocating a more radical approach, while others, including Belgium and Germany, are more cautious, fearing a precedent for the global financial system.^{2 9}.

Orban, Slovakia and the US "peace plan": who else is dissatisfied?

In addition to Hungary, Slovak Prime Minister Robert Fico also expressed his indignation at the EU decision. In a letter to European Council President Antonio Costa, he stated that he would not support "any initiative that would cover Ukraine's military spending in the coming years," and warned that the use of frozen Rosactive assets could "endanger American peace initiatives," where these funds are allegedly seen as a resource for post-war reconstruction.^{1 2}Such rhetoric fits well with the position of both governments, which have recently been simultaneously opposing increased support for Kyiv.

The peace proposals circulating between Washington, Moscow, and European capitals do not provide for the automatic return of Russian assets to the aggressor - on the contrary, they increasingly refer to their use as a guarantee of reparations.^{1 2}Therefore, Orbán and Fico's appeals to the "threat to peace" look more like an attempt to cover up their own pro-Russian positions than a realistic assessment of diplomatic processes.

How Kyiv is reacting: less blackmail – more space for solutions

For Ukraine, the decision to freeze Ros assets indefinitely is an important political and practical signal. First, it means that even a change of government in individual capitals will not give Moscow hope for a quick return of hundreds of billions of euros in reserves.^{2 9}. Secondly, Kyiv gets a more predictable basis for long-term financial plans: if the assets remain blocked, they are easier to use as a basis for credit programs and reconstruction.^{3 9}.

Ukrainian commentators are already emphasizing: depriving Hungary of the opportunity to blackmail the EU every six months with the issue of extending sanctions is not only about money, but also about the nervous system of the Union.^{11 2}Now Brussels has more space for strategic decisions: instead of constant "small crises" due to Orban's next "position", it can focus on the main thing - how exactly, in what form and with what safeguards Russian assets will work to rebuild Ukraine.

Why is the issue of Rosactivists so painful to Orban?

In recent years, Viktor Orban has built an image for himself as "Russia's advocate in the EU": from blocking purely declarative decisions to delaying aid packages to Ukraine and sanctions against Russia.^{11 1}. The ability to stop or make any steps towards Moscow more expensive for Brussels has become a bargaining tool for him – both within the EU and at home, in Hungarian politics. That is why a decision that takes away one of his key levers – the right to block the extension of the asset freeze – is perceived in Budapest as a threat to the prime minister’s political capital.

In addition, Hungarian rhetoric about the “end of the rule of law” in the EU sounds particularly contradictory against the backdrop of claims against Hungary itself, which have already led to a partial freezing of European funds due to problems with corruption and judicial independence.^{10 11}When a state under conditionality for violating the principles of the rule of law accuses Brussels of a “dictatorship,” it sounds more like a political shield than a legal argument.

What's next: how the decision on Rosactive will affect the "reparation loan" for Ukraine

The indefinite freeze is only the first step in a broader plan that involves using frozen assets as the basis for a large reparations loan to Ukraine for 2026–2027.^{2 3}The idea is to take a long-term loan on the market (approximately up to 150–165 billion euros) under the guarantees of Russian assets, and repay the interest and principal over time at the expense of windfall profits that these funds already generate.^{1 3}This approach allows us to help Kyiv now, without waiting for formal reparations and without excessively increasing the burden on the budgets of EU countries.

Disputes continue, in particular due to resistance from Belgium and a number of other states, which fear legal risks and a blow to the reputation of the euro as a reserve currency.^{3 9}. But now that the question of “will the assets remain frozen” has been removed, the discussion moves to the second dimension: “how exactly to use them, so that it is both effective and legally sustainable.” In this area, Hungary’s voice is no longer decisive – and this is what seems to irritate Orbán most of all.

Sources

1. CNN / AP: EU indefinitely freezes Russian assets so Hungary and Slovakia can't veto their use for Ukraine – Orban's quotes about the "end of the rule of law" and "violation of EU laws."
2. Kyiv Independent: EU indefinitely freezes Russian assets, moving closer to financial lifeline for Ukraine – assessment of the volume of assets and plans for a “reparation loan”.
3. Reuters: EU agrees to indefinitely freeze Russian assets, removing obstacle to Ukraine loan – details of the application of Article 122, the amount of 210 billion euros, the role of Euroclear.
4. Euronews: EU triggers emergency clause to indefinitely immobilise Russian assets – explanation of the legal mechanism, conditions for unblocking and Belgium's position.
5. European Interest / Buzb: EU indefinitely freezes Russian assets to use for Ukraine, avoiding Hungary and Slovakia's veto – analysis of the motives to circumvent the veto of Budapest and Bratislava.
6. Interfax-Ukraine: EU freezes Russian assets indefinitely – confirmation of the decision of EU ambassadors and Russia's reaction.
7. BBC News: EU backs indefinite freeze on Russia's frozen cash ahead of summit – context of preparations for a decision on the further use of assets.
8. Euronews / Al Jazeera: comments on the economic consequences of the war for the EU and the justification of the "economic emergency" for the application of Article 122.
9. Reuters / international agencies: the position of the Central Bank of the Russian Federation, lawsuits against Euroclear and discussions around the legality of the use of assets.
10. RBC-Ukraine, "European Truth": Hungary's Orbán slams EU over ban on returning frozen assets to Russia - Orbán's direct reaction, rhetoric about the "dictatorship of Brussels."