Hungary is blocking the European Union from approving the withdrawal of profits from blocked Russian assets for Ukraine’s military needs, the Financial Times has quoted sources as saying.
EU countries have been discussing for several months an initiative to use about €190bn of Russian assets held in blocked accounts at the Belgian depository Euroclear to buy weapons for Ukraine, and it was agreed to send about €2bn a year. However, the newspaper learnt, the Hungarian ambassador at Wednesday’s meeting voted against it, whereas the decision must be unanimous.
“They are now blocking everything related to military support for Ukraine,” a source told the newspaper and suggested that Budapest would not make concessions until at least the June European Parliament elections.
EU leaders have offered Hungary a deal to ensure that their share of blocked assets is not channelled into arms purchases, another source told the FT. Thanks to this, Budapest did not veto the mechanism promoted by the EU, limiting itself to creating delays, he said. The newspaper’s interlocutors familiar with the position of the Hungarian authorities explained: in general, they are not against the transfer of money, but the automatic payment scheme raises concerns.
The diplomats interviewed by the newspaper expressed hope that a solution would be found before July, when the first payment is scheduled to be made.
Hungarian Prime Minister Viktor Orban has previously caved in to EU and US pressure after much bickering, despite publicly criticising sanctions against Russia and aid to Ukraine.
Most of the funds frozen in the EU are held in the Euroclear depository. Last year they generated €4.4bn (about $4.9bn) in net profit. In the first quarter of this year – another € 1.6bn (just over $ 1.7bn).
Two days ago, on 23 May, President Vladimir Putin signed a decree on the right of Russian courts to use US assets in Russia to compensate for the seizure of Russian assets in the US.
“The decree creates a mechanism that allows us to use it in case there are any measures taken against our assets. We will look and act according to the situation,” explained Philippot Gabunia, deputy chairman of the Russian Central Bank.
Russia “will take advantage of judicial prospects and will endlessly defend its interests” in case of asset confiscation, presidential spokesman Dmitry Peskov promised. He called the prospect of seizing Russian money the creation of a dangerous precedent.
Kiev supported the potential transfer of profits, but noted that compared to all of Ukraine’s military needs, this amount is “almost nothing”.
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