European Union bypasses Hungarian veto for U.S. support in Russia sanctions

In an effort to secure U.S. backing for a USD 50 billion loan to Ukraine, the European Commission has proposed changes to the management of sanctions against Russia. These adjustments aim to address Washington’s concerns about the potential for individual EU countries, particularly Hungary, to block the renewal of these sanctions, which could jeopardise the loan.
The EC’s proposals against letting one single country halt sanctions

The U.S. has expressed unease over the current system, which requires EU sanctions to be renewed every six months. With the power to veto, any single member state could unfreeze Russian assets by halting the sanctions, posing significant risks to using these frozen assets, mostly held in Europe, to repay Ukraine’s loan. According to Politico, the European Commission has therefore proposed three potential solutions.
- The first and most favoured plan would freeze Russian sovereign assets for a five-year period, with annual reviews. Under this system, a majority of EU member states would need to agree to unfreeze the assets, making it harder for any one country—Hungary being the prime concern—to derail the process.
- The second option suggests renewing the asset freeze every 36 months, requiring unanimous approval from all EU members. Though it retains a veto possibility, this approach is seen as a practical middle ground and has gathered broad support within the Commission and from most EU countries.
- The third, and least likely, proposal would extend the renewal period for all EU sanctions to 36 months. This option has met resistance not just from Hungary, but potentially from Germany as well.
While these proposals work to align EU policy with U.S. interests, they come at a time when broader economic challenges are facing Europe. During the recent informal meeting of EU finance ministers in Budapest, Hungary’s finance minister, Mihály Varga, emphasised the stark contrast between Europe’s current economic performance and that of other global regions. According to Index, he pointed out that the EU’s annual growth rate is lagging significantly, ranging between 0.5% and 1%, while the U.S. is growing at five times this rate, and China at ten times.

Decision to be made by EU member states
Varga also addressed how the war in Ukraine is disproportionately affecting Europe’s economy, further stressing the importance of ending the conflict through negotiations. He noted, “for us, the Ukrainian front is not some distant point on the map; it’s right next door. Hungarian youth from the minority in Ukraine are also fighting and dying on the front lines.” He reiterated Hungary’s stance of advocating for peace, given the toll the war is taking on both Hungary and Europe as a whole.
These broader economic concerns add urgency to the Commission’s proposals. As Europe struggles to maintain financial stability, it is crucial to prevent any internal political disagreements—particularly over sanctions—from undermining collective efforts to support Ukraine.
Ultimately, the decision on the sanctions regime will be made by EU member states, with the European Council playing a central role in determining which path to follow, Portfolio writes. The discussions among finance ministers in Budapest reflect a deeper need for unity within the EU, as the continent grapples with both the ongoing war and its economic repercussions.
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- VSquare: Hungary acts as middleman for China’s EUR 500 million loan to Orbán’s Balkan allies
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