EU could bypass Hungary’s veto: Ukraine may get record loan
The EU would give Ukraine a EUR 140 billion loan backed by frozen Russian assets – a plan that could fundamentally reshape the EU’s sanctions policy.
The proposal would address one of the biggest problems since the war began: the EU can seize the interest generated by Russian assets, but it cannot access the cash itself, Politico reported.
Hundreds of billions in frozen Russian assets
Since 2022, the European Union has frozen hundreds of billions of euros worth of Russian assets, most of them linked to state banks and sovereign funds. The aim was to restrict Moscow’s ability to finance the war. The money currently sits in European banks, generating interest, but Russia cannot access it.
The largest sum, around EUR 185 billion, is held by the Brussels-based financial firm Euroclear. This amount comes mainly from matured Western government bonds and is now parked at the European Central Bank. Until now, the EU has only used the interest to support Ukraine, but discussions are underway to use the assets themselves as collateral for a large-scale loan.
The biggest loan package ever proposed for Ukraine
The European Union has now put forward a new plan: to jointly raise a massive loan for Ukraine, backed by frozen Russian assets. According to the proposal, the EU would take out a EUR 140 billion loan, to be disbursed to Ukraine in several tranches, covering both military spending and everyday budgetary needs.
German Chancellor Friedrich Merz backed the scheme in an op-ed published in the Financial Times, although he argued that the money should primarily go to military purposes.
“We need a new impetus to change Russia’s calculations. Now is the moment to apply an effective lever that will disrupt the Russian president’s cynical game of buying time and bring him to the negotiating table,” Merz wrote in his editorial.
Merz also stressed that the assets would not be seized outright, only treated as “collateral,” providing the financial backing to sustain Ukraine’s war effort and reconstruction.
Still, the issue is politically sensitive. Some countries fear the move could set a precedent for using other states’ assets as collateral in the future. Russia, for its part, would almost certainly retaliate — through legal challenges, diplomatic disputes, or even economic countermeasures.
The European Commission proposes limiting veto powers
The Commission’s proposal would mean that extending sanctions would no longer require unanimous approval from all member states. Instead, a qualified majority would suffice: at least 55 percent of member countries representing at least 65 percent of the EU population.
According to Politico, the biggest risk is that if even one country — such as Hungary — were to block the extension of sanctions, the freeze would lapse. In that case, the assets could flow back to Russia, even as the EU had already taken out the loan, creating serious financial and political risks.
This proposed change is highly sensitive, as it would effectively curb the veto powers of individual member states, something that many capitals may resist.
Hungary in a difficult position
Hungary faces a dilemma. Financially, it would be easier if Ukraine’s support were not drawn directly from member states’ budgets but from frozen Russian assets. Politically, however, the decision is far trickier: if the government says no, it risks another clash with its European partners. If it says yes, it could strain its ties with Moscow.