Hungary has launched a legal battle against the European Union, filing a lawsuit to annul the bloc’s decision to channel interest generated from frozen Russian assets into military aid for Ukraine. The case highlights a deepening rift between Budapest and Brussels over the EU’s approach to the conflict, raising both legal and political questions about the legitimacy of the measure and the future of unanimity in EU decision-making.

When Russia escalated its military campaign in Ukraine in February 2022, Western nations responded with sweeping sanctions that immobilized an estimated $300 billion in Russian central bank assets worldwide. Of this, nearly €200 billion was trapped in Euroclear, the Brussels-based clearinghouse that manages securities transactions for global financial institutions.

Over time, these assets accrued billions of euros in interest, creating an opportunity for the EU and its allies to consider how the proceeds could be put to use. In 2023, EU leaders settled on a controversial plan: directing nearly all of the interest earned-99.7%-into the European Peace Facility (EPF), a fund designed to reimburse member states that supply military equipment to Kyiv. By February 2024, the decision had taken effect, with projected revenues for Ukraine reaching between €3 and €5 billion annually.

To Brussels, this mechanism represented a creative way to support Ukraine without formally confiscating the assets themselves, an option fraught with legal uncertainties and potential retaliation. Yet to Hungary, the move represented both a breach of procedure and a dangerous precedent for bypassing member state vetoes.

Budapest’s lawsuit, first filed with the EU Court of........

© Blitz