Hungary has joined other EU countries in supporting a  €35bn EU loan package for Ukraine, backed by interest accrued on frozen Russian central bank assets held in Europe. However, Hungary and Slovakia continue to block the freezing of Russian assets in Europe for 36 months, which looks likely to rule out US participation in the G7 initiative.

After the meeting of EU finance ministers earlier this week, Hungarian Finance Minister Mihaly Varga told journalists that Hungary’s position was that prolongation of the Russian sanctions should be postponed until after the US elections in November. Varga denied reports by Euronews that Hungary wanted to block extending the freeze of Russian assets held in Europe.  

Varga said the related legislation is expected to be adopted in October after the negotiations between Coreper (the member states' permanent representatives to the EU) and the European Parliament.

The up to €35bn package, which will be funded by the EU's common budget, is the bloc's share of a $50bn defence loan for Ukraine announced by the G7 in June. It was passed by majority, with neutral Malta abstaining.

The United States wanted to participate in the loan scheme if the Russian assets were frozen for 36 months, which cannot be guaranteed by the EU, due to the resistance of Budapest.  Hungary has blocked the extension for longer than the six-month period, arguing it wants to wait until after the US presidential election in November. If Republican candidate Donald Trump were to win, he has said he would stop aid to Ukraine.

Around €210bn in Russian assets have been frozen in EU banks, generating an estimated annual yield of €2.5bn-3bn.