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Hungarian Victor Orban would concentrate European taxpayers with a bigger bill to support Ukraine if the EU forces the EU to lift restrictions on its frozen Russian assets of 210 billion euros, Estonian foreign minister warned.
Margus Tsahkna told the Financial Times that blocking updates to EU sanctions – a threat that Orbán has repeatedly done but has never acted before.
The EU and G7 (including the US, Canada, Japan, France, Italy, Germany and the UK) supported 50 billion euro loans to Ukraine last year using profits arising from around 260 billion euros of frozen assets around the world. If assets are not frozen, the EU and the US each will be liable for 2 billion euro loans, with the rest being the other G7 members.
“The problem (IS) is that these assets that guarantee this loan are gone,” Tsahkna said, referring to the scenario in which EU sanctions expired.
Authorities hope Orban will take a more stringent approach in future debates for sanctions that will expire at the end of July. Sanctions must be agreed unanimously by EU Member States. The majority of the frozen assets are held by Euroclear, a Belgium-based financial intermediary.
“If they are trying to block it, the sanctions will be overthrown. And the assets of the central bank will be delivered as prizes to Russia, (Vladimir) Putin,” Tsahkna told the Financial Times. “We can’t make it happen.”
The European Commission is trying to develop a fallback plan if the sanctions rollover fails, but EU officials say most legitimate measures are difficult.
“We need some legal frame or some kind of procedure,” Tsarkna said. He said it would need to involve a “coalition of will” that trans-EU to include G7 members and countries such as Norway.
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Estonia advocates that G7 countries should seize Russian assets rather than be subject to sanctions. “It would be the clearest and most understandable solution,” Tsarkna said.
Some EU and G7 countries have argued that they could resist such moves, violate international law and undermine faith in the Euro. Belgium has a 19 billion euro assets held in the central securities depository and is strongly opposed to such a move, fearing it will become a major target for legal challenges.
“Our position has not changed,” Belgian Finance Minister Vincent van Petegem told FT. “Formulation is not an option for now due to all the risks associated with it. At the same time, we recommend that you maintain these frozen assets as levers during peace negotiations with Russia.”
Tuna said he was sensitive to his reluctance to stealing Belgian assets. “We certainly understand that in very complicated circumstances they cannot leave them alone,” he said, adding that such decisions should ideally be taken collectively by a group of states, including the entire G7.
Negotiations with Hungary should continue, noting that Orban is dependent on EU funds, he said it should continue. “They know there are a lot of problems with the economy,” he said.
Russia is trying to find a way to reach its assets despite their assets being frozen. Ukrainian officials have warned that they are trying to sell portions to investors, and investors will recover them after being frozen in the future day.
Tsahkna dismissed these schemes as unrealistic. “Of course, Russia wants to use frozen assets to negotiate and trade. But in reality, it’s frozen in Europe because it doesn’t have these assets.”
Tuna ultimately said what happens with the sanctions rollover and frozen assets will depend on peace negotiations mediated by the US. “Even President Trump has said that in theory they will give him time until the end of April and then act afterwards.”
Additional Reports by Paola Tamma of Brussels
