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European Union officials are putting in place fallback measures including using an 81-year-old law involving the King of Belgium to protect the bloc's sanctions against Russia after Hungary threatened to veto their renewal.
Hungarian Prime Minister Viktor Orban told the bloc's other 26 leaders in December that he could block the extension of EU sanctions against Russia this month, which would require unanimous approval – a move that would see the measures end on January 31. .
Orban said he is awaiting the inauguration of Donald Trump as President of the United States on Monday. If Trump eases US sanctions on Moscow, Orban said he would insist that the European Union follow suit.
“Now there is a major change in the US administration… A meaningful exchange must take place before we decide to extend the sanctions regime for another six months,” János Buka, Hungarian EU Affairs Minister, told reporters on Thursday. “We want to keep our decision,” he added. So that we can know how the American administration sees the future of the sanctions regime.”
The Biden administration is outgoing on Wednesday Relisting about 100 entities From the financial, energy and defense sectors under a different law that engages Congress in an attempt to complicate any efforts by Trump to remove them from the Russian sanctions list.
While EU officials say their primary focus is to persuade Orban to keep sanctions on Russian companies and sovereign assets frozen in the EU, they are working on measures that could protect at least some of them.
These assets include about 190 billion euros of Russian state assets held by the Central Securities Depository Corporation (Euroclear), based in Belgium. Profits from those assets will repay a $50 billion loan to Ukraine, and officials believe they are an important part of a potential ceasefire agreement.
If the sanctions were lifted, one official described “the money in Russia the next day” as financial intermediaries, and they would have no legal basis to hold it. Trade restrictions and sectoral sanctions, such as the oil import ban, will also end.
“I'm really very concerned about this, and others should be too,” said a senior EU diplomat who holds regular discussions with Hungarian officials. “There is a high probability that Orban will not collapse.”
Since state assets are effectively held in a Belgian entity, one fallback option is to use a 1944 war decree that allows King Philippe to block the transfer of assets from the country, according to four officials involved in the discussions.
The Royal Palace declined to say whether the king had been contacted, adding that the responsibility for such a decree lay with the government, although it would need the king's signature.
Euroclear declined to comment.
“Belgium, along with other EU member states, is doing everything in its power to reach an agreement on renewing sanctions against Russia. We have been able to reach an agreement in the past and we will continue to work to ensure that this is the case,” a spokesman for the Belgian Foreign Ministry said. “Also this time.”
Belgium has long resisted implementing national measures on frozen assets, which it fears would make it vulnerable to legal challenges from Russia. A Belgian official said that using exceptional powers would violate the bilateral investment treaty that Belgium concluded with Russia.
A senior Commission official involved in the preparations said: “If Orban does not surrender, the only solution is a national solution.”
Several member states have put forward the proposal to strip Hungary of its voting rights to move forward with the renewal process, but such a radical step may fail to secure the required unanimous support from all other countries.
Anita Heber, EU foreign affairs spokeswoman, said that “work continues to ensure a smooth and timely agreement” by member states to extend sanctions.
Additional reporting by Henry Foy and Marton Donnay in London and Andy Pounds in Brussels
