Why Hungary’s new veto could undermine both sanctions and Ukraine’s military funding

15 March 2025 is the deadline for the European Union to renew sanctions against individuals and organisations involved in Russia’s aggression against Ukraine.

If the deadline is missed, more than 2,400 sanctioned individuals and businesses could suddenly be freed from EU-imposed restrictions. The sanctions package at risk includes the freezing of tens of billions of euros in assets belonging to Russian companies, oligarchs and politicians.

There is now a real danger of this happening thanks to Hungary, which is blocking the approval of sanctions. However, until now, Hungary’s opposition has usually amounted to blackmail, demanding concessions from the EU in exchange for its support. This time, however, Brussels sources say Hungary is not making any demands at all.

Read more in the article by Tetiana Vysotska, European Pravda’s correspondent in Brussels – Hungary defies sanctions: Trump ally moves to unfreeze billions in Russian assets.

In simple terms, the European Union's sanctions regime against Russia consists of two main categories, with a history dating back to 2014.

Since then, Both sanction categories have been repeatedly expanded since then. Even after Russia’s full-scale invasion of Ukraine in 2022, the EU maintained the legal framework of its 2014 sanctions, continuing to add new restrictions within the same regulatory framework.

However, a key procedural legacy from the pre-war period remains: EU sanctions are only valid for six months at a time and must be formally renewed by the European Council every six months. But in 2025, things did not go as planned.

Under the current decision, all these sanctions are set to expire on 15 March 2025. If they are not renewed, all restrictions will be legally lifted on 16 March 2025.

The total value of Russian assets immobilised in jurisdictions across the EU, the G7 and Australia is estimated at approximately €260 billion. The majority of these funds – around €210 billion – are frozen within the European Union, with €190 billion held in Belgium’s Euroclear, the world’s largest securities depository.

Money belonging to Putin and his oligarchs is in the mix.

This sum includes oligarchs’ funds, which are often overlooked.

"At least a third of the total sum consists of funds belonging to sanctioned Russian individuals and entities," a diplomat from a key EU member state told European Pravda.

According to an EU official who spoke to European Pravda on condition of anonymity due to the sensitivity of the matter, failure to extend the sanctions could effectively unfreeze up to 30% of all frozen Russian assets.

That means at least €60 billion (possibly more) could be at stake.

This poses a serious threat to Ukraine's financial aid programmes.

Since late 2024, a new mechanism has been in place whereby G7 countries provide Ukraine with financial aid through loans backed by windfall tax revenues from frozen Russian assets.

Additionally, hopes of transferring the frozen Russian funds to Ukraine as reparations and for reconstruction will diminish.

It would dash hopes of transferring the frozen assets themselves to Ukraine – something Kyiv considers a potential source for war reparations and reconstruction funding.

Brussels has no doubt that Hungary is aligning its position with the United States.

Multiple sources say that Hungary initially sought to have eight individuals removed from the sanctions list, although diplomats refuse to disclose their names.

However, EU diplomats are considerably more sceptical.

Even in the worst-case scenario, Brussels would still have a brief window to negotiate a late agreement and prevent the release of frozen assets. The EU’s infamous bureaucratic complexity, with its multiple legal and procedural steps, could delay Russia from regaining access to its funds.