Brussels is preparing to use capital controls and tariffs on Russia in case Hungary prevents the extension of EU economic sanctions on Moscow in response to Ukraine's war.
The European Commission has told the national capital that a large portion of sanctions, including 200 billion euros in frozen Russian state assets, could be transferred to different legal basis to avoid Budapest's veto, which rejected Budapest's veto.
The preparations come as the EU vows to maintain the economic pressure in Moscow, as diplomatic efforts force Russia to agree to a proposed ceasefire and direct peace talks with Ukraine.
But Hungary's Prime Minister Viktor Orbán repeatedly imposed EU sanctions on Russia, but he threatened to reject the extension of economic restrictions unless all 27 member states agree to an additional six months. These restrictions also include import bans and price caps in areas such as energy.
The solutions under consideration only require most EU countries to expand sanctions. Officials said the committee mentioned two options in recent weeks that would prevent cash flow to Russia, while trade measures would prevent cash flow to Russia.
Previous ideas included bilateral state measures that would allow Belgium (like Russia’s most of the 200 billion euros Belgian state) to ban the repatriation of Russian assets.
"We are all focused on planning," one official said. "But there is a discussion about the legal basis of alternative options."
Budapest has not raised serious objections to the new sanctions imposed on Moscow at a meeting on Monday, according to three diplomats' briefings. The 17th set of measures expected to be taken in China and elsewhere for companies in China and elsewhere is expected to be signed on Wednesday and officially implemented early next week.
The EU imposed tariffs on Russian and Belarusian fertilizers in January, a move two officials said, showing how existing sanctions on other Russian imports could be converted into trade measures.
The committee has pledged to propose a legal proposal next month, which will allow it to ban new gas and spot market contracts this year and conduct a total phase in 2027. It insisted that this was not sanctions, but refused to provide more detailed information to Member States.
It also said it would propose tariffs on enriched uranium, part of an effort to reduce EU reliance on Russian fuel.
Some EU diplomats fear that the ban on gas without sanctions will lead to companies being involved in a long legal battle and urged the commission to ensure any new measures are legally watertight.
At a meeting last week, the committee said it was surprised by the “lack of trust” of the member states and that it had “the best person” to engage in the rules.