The EU plan to provide Ukraine with a €35bn loan includes a significant change to the sanctions regime, which Hungary has so far blocked.
Hungary has confirmed that it will not support a change in EU sanctions on Russia’s frozen assets, which the G7 allies need as collateral for a 45 billion euro loan to Ukraine, until after the US elections next month.
The G7 project is designed to use windfall profits from Russia’s frozen assets to gradually repay the money given to Kiev, while exempting allies from footing the bill.
The European Commission has proposed a contribution of up to 35 billion euros, depending on how much other Western allies offer to contribute.
The US is concerned about the long-term stability of this unprecedented scheme, given that EU sanctions on frozen assets must be unanimously renewed every six months. This means that at any moment a member state could block the renewal, release the assets and throw the whole project into disarray.
To allay Washington’s concerns, Brussels has proposed extending the renewal period for frozen assets from six to 36 months.
While member states are expected to agree on the €35 billion loan in the coming days thanks to qualified majority rules, Budapest says the key change to the sanctions regime, which requires unanimity, should wait until 5 November.
EU rejects Hungarian and Slovak requests for talks with Ukraine on oil sanctions
