Protection from Orbán: how Trump "suspended" the future of Russian assets and what the EU plans to do

Trump's silence about Ukraine in his inaugural speech is not just a political fact. Over the past year, while using loud rhetoric about the need for peace negotiations, the new-old US president has avoided addressing other sensitive topics related to Ukraine.

One such topic, which he has not yet directly addressed, is the fate of the frozen reserves of the Russian Central Bank.

As 20 January approached, rumors about his administration's potential decision regarding these assets became increasingly active. These speculations surfaced not only in Washington but also in Brussels and even Budapest.

The risk of failing to extend sanctions and the de facto return of Russia's frozen assets seemed increasingly likely. Brussels had to urgently seek a safeguard against this scenario.

The intrigue of White House 

Even before his victory in the presidential election, Donald Trump was, albeit indirectly, constantly present in discussions about the fate of frozen Russian assets.

Only possibility of his second term raised doubts about the adoption of the REPO Act, as Democrats were hesitant to grant him the authority to confiscate Russian assets.

At the same time, potential Vice President J.D. Vance criticised the REPO Act, arguing that it could restrict Trump's flexibility in potential negotiations with Putin.

After the election of the new US president, the issue of asset confiscation received less attention in the rumours surrounding negotiations than topics like the deployment of peacekeepers in Ukraine or territorial debates. However, by early 2025, reports emerged suggesting that the Biden administration might move to confiscate frozen Russian assets before the end of its term.

Although these plans never came to fruition, some details that emerged in the media could later become part of the Trump administration's strategy.

According to these reports, the United States would need to seize Russian sovereign assets simultaneously with the European Union and other allies. These funds would then be transferred to a special "escrow account" – an account in which funds can only be returned to the owner under specific conditions. The assets would remain blocked until an agreement is reached to end Russian aggression against Ukraine.

What happens next – whether the money is returned to Moscow or transferred to Ukraine – remains unspecified.

This approach though aligns seamlessly with Trump's style of thinking, where money – especially when it involves hundreds of billions of US dollars – becomes both a lever of pressure and a key bargaining chip in future negotiations.

To implement this strategy, the new White House team would need to secure the support of the European Union or, at the very least, advance this initiative with the help of its long-standing ally, Hungarian Prime Minister Viktor Orban.

The King against the Hungarian veto

In reality, it is not the United States but the European Union that plays the leading role in determining the future of Russia's frozen assets.

Two key banking institutions within the EU – Belgium's Euroclear and Luxembourg's Clearstream – hold approximately $200 billion of the total announced $300 billion in frozen assets.

It was the active, albeit lengthy, efforts of the European Union that initially enabled the transfer of income from these assets to Ukraine, and later facilitated the financing of the "reparation loan."

Hungary has repeatedly leveraged the issue of sanction extensions to advance its own interests.

Ahead of the next sanctions review in 2025, Hungarian Minister for EU Affairs János Bóka stated that his government might withhold support for extending the freeze on the Russian Central Bank's reserves.

"There is no decision on the Hungarian position yet. We want to reserve our decision until we know how the US administration sees the future of the sanctions regime."

Such a position could lead to the unblocking of the aforementioned assets, and therefore the EU began to look for a plan "B", which was found in the form of... the prerogatives of the Belgian King Philippe I.

In 1944, according to a special decree, the Belgian monarch was granted the ability to block the withdrawal of assets from the country.

In fact, this would mean the application of restrictive measures not at the pan-European level, but at the national level, which Belgium had tried to avoid until now. However, the Russian billions would remain immobilised.

Although on the evening of 21 January, Radio Liberty's Brussels correspondent Rikard Jozwiak reported that EU sanctions would most likely be extended in coordination with the new US government, the possibility of using the option of a royal decree remains a realistic alternative.

A dangerous scenario for Ukraine

The proposal to transfer frozen Russian assets to an "escrow account" remains underdeveloped; for instance, it is unclear how the $50 billion "reparations loan" would be repaid.

At this stage, however, this scenario does not appear to be the most favourable option for Ukraine.

In fact, the formula that our allies have repeatedly repeated: "Russian assets will remain frozen until Russia compensates Ukraine for the damage caused" may change to "until Russia concludes a peace agreement."

This scenario contains a lot of unknowns.

Obviously, during the negotiations, many alternatives may arise for which these funds can be exchanged, the same security guarantees or territorial issues. However, in another case, the return of these assets may become an incentive bonus for the Kremlin for stopping its own illegal actions against Ukraine.

In turn, for Ukraine, this will mean the loss of the main and, potentially, the only source of compensation for the damage caused by the aggression.

On the other hand, the centralization of frozen Russian reserves may allow unilaterally deciding their future fate, even without Russia's return.

As practice shows – particularly the case with Roman Abramovich’s funds from the sale of Chelsea Football Club  – Ukraine’s allies may push for the use of these assets in ways that align with their own interests and benefit their economies, especially under a Trump administration.

However, this approach may not always be favourable for Ukraine.

The fact that the European Union controls two-thirds of these assets, coupled with the historical authority of the Belgian monarchy to block their withdrawal even without unanimous EU approval, provides a potential safeguard. This could prove particularly valuable in scenarios where Hungary or, potentially, Slovakia seeks to veto sanctions, or where the White House pressures for agreements that fail to reflect the interests of Kyiv and Brussels.

It is evident that the fate of these assets will serve as a critical bargaining chip in future negotiations. The task for the Ukrainian government is to ensure that this lever is wielded to prioritise Ukraine’s interests and those of individuals affected by Russian aggression.

Ivan Horodysky

Attorney, Dnistryanskyi Center

The material was prepared with the support of the International Renaissance Foundation as part of the project "#Compensation4UA/Compensation for war losses for Ukraine. Phase IV: Addressing Specific Issues to Ensure Compensation.