The European Commission is developing a legal solution that would deprive Budapest of the ability to block the extension of sanctions against Russia, a key condition for using more than 140 billion euros in Russian assets to support Ukraine, Politico sources reported.
Belgium, home to clearing giant Euroclear, fears that if sanctions against Moscow are not extended unanimously, the country will be forced to return billions in missing profits from frozen assets to Russia. That is why Brussels is pushing for a mechanism that would remove the risks of a unanimous vote.
EU sanctions against Russia are currently due to be renewed every six months and require unanimous support from all member states, giving Hungarian Prime Minister Viktor Orban the power to block the decision — and jeopardize the scheme to use the proceeds from Russian assets.
To avoid this, the European Commission proposes to apply Article 122 of the EU Treaty, which allows for qualified majority voting if the economic situation and "solidarity between Member States" so require.
EU lawyers have already confirmed that such an interpretation of the article is possible, since the suspension of sanctions would entail economic risks for the entire Union. The use of this provision would allow:
— deprive Hungary of the opportunity to block the renewal of sanctions;
— extend sanctions not once every six months, but once every three years;
— guarantee the security of the mechanism for providing financial assistance to Ukraine from profits from Russian assets.
Belgium, which holds the lion's share of Russian assets, fears that if sanctions are lifted, the country will be legally responsible for returning frozen Russian funds. This includes tens of billions of euros that Euroclear received as profits from transactions with Russian assets.
It was this risk that prevented Brussels from agreeing on a financial model for aid to Ukraine. Therefore, legal “insurance” from the European Commission is crucial.
According to Politico, the European Commission is seeking to convince Belgian Prime Minister Bart De Wever to support the package once the legal mechanism is ready.
The issue is completely tied to deadlines: if the agreements fail by April, Ukraine's budget could run out, which would jeopardize the stability of public finances during the war.
An EU summit will be held on December 18, where leaders will discuss the Russian assets and the sanctions package. Belgium's full proposal for a loan mechanism is expected on December 3.
