Orban fulfills his threat to delay decision on duration of Russia sanctions until US election

Hungary's Prime Minister Viktor Orban, as announced by his government, did not allow the adjustment of European sanctions against Russia, Bloomberg reports.

These changes are necessary to increase the US share in the new $50 billion financial aid package for Ukraine, agreed upon by G7 leaders in the summer of 2024. The loan is to be secured by future revenues from frozen Russian assets.

According to agency sources, Orban refused to make concessions during the EU summit in Brussels on Thursday, fulfilling his threat to postpone this issue until the US elections.

Several European leaders tried to talk to Orban, but to no avail. One interlocutor stated that Hungary's position is absurd because it will force the European Union to contribute more to the new package for Ukraine.

The European Union is ready to take on almost 80% of the financial aid for Ukraine, amounting to 35 billion euros. However, if the United States agrees to increase its share (for which it is necessary to clarify the mechanism for extending sanctions), the burden of the loan on the EU will be almost halved.

Budapest is blocking the extension of the standard term for extending sanctions on frozen Russian assets from six months to three years. This is important for the US because the risk of premature unfreezing due to the position of one of the EU countries—for example, Hungary—threatens the return of money to creditors.

If the European Union extends the term of sanctions, the US share in the package for Ukraine could be approximately $20 billion. If the term of sanctions is not extended, the US is still expected to make a contribution, but it will be smaller.

Contributions are also expected from the United Kingdom, Canada, and Japan.

In June 2024, the leaders of the G7 countries (USA, Japan, Germany, France, United Kingdom, Italy, and Canada) agreed to provide Ukraine with $50 billion, using future revenues from frozen assets of the Russian Federation.

According to the plan, the burden of the loan will fall on the G7. Ukraine will receive the money in the form of grants, so it will not need to be returned.

So far, only the European Union has promised Ukraine a specific amount—35 billion euros.

Ukraine wants to "stretch" the use of these funds for at least three years, rather than using them all at once.