Europe seeking ways to extend anti-Russian sanctions

EU officials are preparing backup plans, including the potential use of an 81-year-old law involving the Belgian king, to protect the bloc’s sanctions on Russia after Hungary threatened to veto their renewal.

Hungarian Prime Minister Viktor Orbán informed the other 26 EU leaders in December that he could block this month’s extension of EU sanctions against Russia, which requires unanimous approval. This would result in the measures expiring on January 31, Caliber.Az reports via foreign media.

Orbán mentioned that he was awaiting the inauguration of Donald Trump as US president on January 20. If Trump eases US sanctions on Moscow, Orbán stated he would push for the EU to adopt a similar approach.

“Now there’s a significant change in the US administration . . . a meaningful exchange should take place before we decide to roll over the sanctions regime for another six months,” said János Bóka, Hungary’s EU affairs minister, in comments to reporters. “We want to reserve our decision until we know how the US administration sees the future of the sanctions regime.”

The outgoing Biden administration relisted around 100 entities from the finance, energy, and defence sectors under a different law involving Congress to complicate any efforts by Trump to remove them from the Russia sanctions list. While EU officials emphasize their primary objective of persuading Orbán to maintain sanctions against Russian companies and sovereign assets frozen within the EU, they are also exploring measures to protect at least some of them.

These assets include around 190 billion euros of Russian state funds held at the Belgium-based central securities depository Euroclear. The profits generated from these assets are intended to repay a $50 billion loan to Ukraine, and officials consider them a key element in a potential ceasefire agreement. If the sanctions were to lapse, an official warned that “the money [would be] in Russia the next day,” as financial intermediaries would have no legal grounds to retain control over the assets. Trade restrictions and sectoral sanctions, such as the oil import ban, would also be lifted.

“I am really very worried about this and others should be too,” said a senior EU diplomat who frequently engages in discussions with Hungarian officials. “There’s a high chance Orbán does not break.” 

Since the state assets are physically located in Belgium, one potential fallback is to invoke a wartime decree passed in 1944, which grants King Philippe the authority to block the transfer of assets from the country, according to four officials involved in the talks. The Royal Palace declined to comment on whether the king had been approached, noting that the responsibility for such a decree lies with the government, although it would require the king's signature. Euroclear also declined to provide any comment. 

“Belgium, together with the other EU member states, is doing everything possible to reach an agreement on the renewal of 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 also the case this time,” said a spokesperson for Belgium’s foreign ministry.

Belgium has consistently resisted implementing national measures concerning the frozen assets, fearing it could expose the country to legal challenges from Russia. A Belgian official noted that using the extraordinary powers would violate a bilateral investment treaty Belgium holds with Russia. 

“If Orbán doesn’t yield, the only solution is a national one,” said a senior Commission official involved in the preparations.

Several member states have suggested the possibility of stripping Hungary of its voting rights to push through the renewal, but such a drastic step would likely fail to garner the unanimous support required from all the other states. 

Anitta Hipper, EU spokesperson for foreign affairs, stated that “work is ongoing to ensure a smooth and timely agreement” by member states to extend the sanctions.

By Naila Huseynova