Russian President Vladimir Putin and Hungarian Prime Minister Viktor Orbán during a joint press conference in the Kremlin, July 5, 2024.
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One of Russia’s last remaining allies in the European Union told CNBC that he believes the proposal to finance Ukraine’s reconstruction through frozen Russian assets has no way forward.
The European Commission, the EU’s executive arm, is considering using seized Russian assets held in Europe to provide further financial support to Ukraine.
Hungarian Prime Minister Viktor Orbán said in an interview with CNBC as officials arrived for a European Council meeting that proposals to use entrenched assets as a means of aiding Ukraine had been “killed.”
“It’s a dead end. It’s over,” he said. “There just isn’t an adequate level of support behind it.”
Prime Minister Orbán is considered Russia’s closest ally in the EU and has been a vocal critic of plans that could use hundreds of billions of euros in frozen assets to finance reparations loans to Kiev. But Hungary is not the only country to have doubts about this measure.
Belgium has expressed concern about the possible legal and financial risks, saying its support is crucial given the huge amount of frozen assets held by the Brussels-based clearinghouse Euroclear. Italy and Bulgaria also support Belgium’s resistance to the proposal.
The Kremlin, meanwhile, says such measures amount to justifying war, and Russia’s central bank announced last week that it would sue Euroclear in a Moscow court “for recovery of the losses caused to the Bank of Russia.”
Financing options for reparations for Ukraine will be high on the agenda of the European Council, which is scheduled to conclude on Friday.
“Without new additional financial support from the EU and other international donors, Ukraine is expected to run out of funds in early 2026,” the European Parliament said in a press conference on Wednesday, adding that Hungary had already blocked the option of using EU budget slack to provide funds to Kiev. Decisions on the use of the EU’s own finances require a unanimous vote from all 27 member states.
“If both options proposed by the European Commission are blocked, a ‘coalition of the willing’ could become a last resort,” the European Parliament said on Wednesday.
Asked ahead of Thursday’s meeting whether he was acting in Europe’s or Russia’s interests by working to prevent the EU from using Russian assets, Orbán said: “I’m just working for peace.”
“I think what we need to do is take some steps towards peace, not war,” he said.
As peace negotiations drag on, Russian and Ukrainian militaries are entering their fourth winter. Negotiations are expected to continue until the end of this week, possibly in Miami, after weeks of talks between U.S., Russian, Ukrainian and European delegations.
Despite Prime Minister Orbán’s position on the matter, the EU’s high representative for foreign affairs and security policy, Kaja Karas, told reporters in Brussels on Thursday that the EU was pushing for peace alongside Ukraine, but that it was “unilateral”.
“I don’t see any desire from the Russian side to move or talk seriously about peace,” she said. “We need to put pressure on Russia to move from pretending to negotiate to actually coming to the negotiating table.”
Unlike Orbán, she sounded optimistic about pushing forward with proposals on reparation loans and asset freezes.
“The proposals we are working on address Belgium’s concerns,” he said. “We have addressed the issues raised by Belgium, so we hope that we will cross the finish line. President Putin expects us to fail, so we should not give it to him.”
A Kremlin spokesperson did not respond to CNBC’s request for comment.
