The European Union (EU) has taken decisive action by indefinitely freezing Russian assets within its jurisdiction to prevent Hungary and Slovakia from obstructing their use for Ukraine’s benefit. This decision, announced on December 15, 2023, ensures that billions of euros can be mobilized to assist Ukraine amid its ongoing conflict with Russia.
Utilizing a special procedure designed for economic emergencies, the EU has blocked access to these assets until Russia ceases its military actions in Ukraine and compensates for the extensive damage inflicted over the past nearly four years. EU Council President António Costa emphasized the commitment made by European leaders in October to immobilize Russian assets until the war concludes. “Today we delivered on that commitment,” he stated.
This measure is pivotal as it allows EU leaders to strategize during an upcoming summit on how to utilize approximately €210 billion (about $247 billion) in Russian Central Bank assets. These funds are intended to underwrite a significant loan aimed at supporting Ukraine’s financial and military needs over the next two years. Costa noted, “Next step: securing Ukraine’s financial needs for 2026–27,” ahead of the summit scheduled for December 18, 2023.
The freezing of these assets also prevents their use in any negotiations aimed at ending the conflict without prior European approval. A recent 28-point plan proposed by U.S. and Russian envoys suggested using the frozen assets for Ukraine, Russia, and the United States, but it was firmly rejected by Ukraine and its European allies.
Hungarian Prime Minister Viktor Orbán, a close ally of Russian President Vladimir Putin, criticized the decision, claiming that the European Commission is “systematically undermining European law.” He argued that this action signals a troubling departure from the rule of law within the EU. Orbán stated on social media that Hungary would strive to restore lawful order.
In response, Slovak Prime Minister Robert Fico expressed his opposition to any initiatives that would involve financing Ukraine’s military expenses. Fico warned that utilizing the frozen Russian assets could hinder ongoing U.S. peace efforts, which rely on these resources for Ukraine’s reconstruction.
The European Commission contends that the war has imposed severe economic costs, raising energy prices and hindering growth within the EU. To date, the EU has provided nearly €200 billion (about $235 billion) in support to Ukraine. Belgium, where Euroclear, the financial clearing house holding the majority of the frozen funds, is located, remains opposed to the “reparations loan” plan, citing potential economic and legal risks.
On the other hand, the Russian Central Bank has initiated legal action against Euroclear for damages resulting from its exclusion from managing the assets. The bank has labeled the EU’s strategy to use these assets for Ukraine as “illegal” and in violation of international law, asserting it breaches the principles of sovereign immunity.
As the situation continues to evolve, the implications of the EU’s asset freeze will be closely scrutinized, particularly regarding its potential effects on the geopolitical landscape and the ongoing conflict in Ukraine.
