Hungary Prime Minister Victor Orban is blocking the EU’s plan to commit 140 billion euros to Russian assets to lend them to Ukraine. The European Commission, however, argues that it has found a legal detour to exclude Hungary from the decision -making process.

As Politico notes, normally, such a drastic measure, the commitment of frozen Russian reserves would require unanimity of the 27 states, giving the EU leader’s right to the EU leader, who is considered to be affiliated with Russian President Vladimir Putin.

Given the long history of Orban in an attempt to block sanctions against Kremlin, EU legal experts are processing a scheme so that the decision on the proposed “remediation loan” to Ukraine can be taken by a special majority.

According to the same report, the Commission is hoping to support its movement in a set of conclusions of the European Council that all EU leaders, including Orban, had accepted on December 19 last year.

In that joint statement, leaders said: “Russian assets must remain committed until Russia stops the war against Ukraine and compensate it for the damage caused by this war.” At that time, the statement was primarily interpreted as an indication that the assets themselves must remain frozen, especially at the Euroclear bank in Belgium, and the Russians should not have access to them, while interest could be used for the war.

The new argument of the Commission is that this statement provides sufficient legal coverage to change the rules of sanctions from unanimity to a special majority. In order for this to work, all of the other states would have to agree.

“This would require a high level of political agreement from all or most Heads of State or Government,” the Commission said in a note to the EU ambassadors who met on Friday.

Not only Hungary disagree

Ensuring such a wider agreement will not be easy, Politico notes. There are other Russia -friendly countries in possible correlation, such as Slovakia.

There is also the “problem” of Belgium. The Belgian government has already reacted, expressing concerns that the EU’s “rapture” operation could expose Belgium and Euroclear, the financial institution that keeps Russia’s frozen state assets in legally retaliation from Moscow.

“Getting Putin’s money and incorporate the dangers is not going to happen, let me be clear,” Prime Minister Bart De Wever said in New York, at the margins of the UN General Assembly. “If countries realize that the reserves of central banks can disappear by decision of European policies, they may withdraw them from the euro area.”

Although De Wever admitted that he was willing to discuss the matter, Belgium generally supports Putin, as opposed to Hungary and Slovakia.

The main assurance expected to be given to the Belgians is to undertake the replacement of Euroclear assets to be sent to Kiev by other EU countries through common IOU guaranteed.

EU leaders meet in Copenhagen next week, where discussions on the loan in Ukraine are planned, although any decisions are not expected there, but at the end of October, after finance ministers are examining the proposal in Luxembourg on October 10.

“The goal in Copenhagen is to gather adequate support from other states to isolate Orban,” said EU diplomat. “We are in a gray zone.”

Key supporters of the committee’s plan are Germany, Spain, Poland and the Baltic countries adjacent to Ukraine. On the contrary, France and Italy have so far demonstrated a cautious about innovative ideas for the use of frozen state assets.

The Brussels bet

Most state Russian assets have been frozen in Euroclear since Putin began the invasion of Ukraine in February 2022. Part of them had been invested in western state bonds that ended and turned into cash. These cash is currently on a deposit account at the European Central Bank.

Brussels has previously worked out ideas for the use of frozen assets, but previous efforts have encountered strong political reactions.

The “remedial loan” is projected to be disbursed in part and to use “for European cooperation in defense” and “to meet budgetary needs”, the Commission notes in a note.

A veto from Budapest would practice Russian money to Moscow in practice, leaving the capital debtors to repay the loan. The new legal detour would reduce this risk. However, many countries are concerned that the use of old political statements to legalize future decisions will set a dangerous precedent.