Hungary takes legal action against EU over frozen Russian assets sent to Ukraine

(MENAFN) Hungary has taken legal action against the European Union over its decision to use frozen Russian assets to fund military support for Ukraine, despite Hungary’s opposition to the move. Following the escalation of the conflict in Ukraine in 2022, Western countries froze around $300 billion in Russian assets, with about €200 billion held by Euroclear, a Brussels-based clearinghouse. These funds have generated billions in interest, and the West has been exploring ways to use this income to help finance Ukraine.

The lawsuit challenges a 2024 decision by the European Council to channel military aid to Ukraine through the European Peace Facility (EPF), which compensates countries that send weapons to Kiev. This measure, implemented in February, directs 99.7% of the interest earned on the frozen Russian central bank assets to Ukraine, providing an estimated €3-5 billion ($3.5-5.8 billion) annually.

Hungary initially filed the case with the EU Court of Justice, which later transferred it to the General Court. Budapest demands the annulment of the decision to allocate funds for military support to Ukraine and seeks compensation for legal costs. Hungary argues that the EPF bypassed its veto rights by classifying it as a non-contributing member state, violating the principles of equality and democratic functioning within the EU by unjustly denying Hungary its voting rights.

Budapest opposes unconditional EU support for Ukraine, favoring peace negotiations over ongoing conflict. It has frequently used its veto to block EU financial and military aid, including a controversial €50 billion aid package at the end of 2023. This stance has led other EU members to seek ways to circumvent Hungary’s opposition.

Moscow has condemned the freezing of assets as theft and a violation of international law, warning that it could backfire on the West. Kremlin official Maksim Oreshkin said the freeze had eroded trust in Western financial systems, and President Vladimir Putin warned that seizing the assets might hasten a global move toward alternative payment systems.

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