The prime minister of Hungary Victor Orbán posted this morning:
Today, the Brusselians are crossing the Rubicon. At noon, a written vote will take place that will cause irreparable damage to the Union.
The subject of the vote is the frozen Russian assets, on which the EU member states have so far voted every 6 months and adopted a unanimous decision. With today’s procedure, the Brusselians are abolishing the requirement of unanimity with a single stroke of the pen, which is clearly unlawful.
With today’s decision, the rule of law in the European Union comes to an end, and Europe’s leaders are placing themselves above the rules. Instead of safeguarding compliance with the EU treaties, the European Commission is systematically raping European law. It is doing this in order to continue the war in Ukraine, a war that clearly isn’t winnable. All this is happening in broad daylight, less than a week before the meeting of the European Council, the Union’s most important decision-making body, bringing together heads of state and government. With this, the rule of law in the European Union is being replaced by the rule of bureaucrats. In other words, a Brusselian dictatorship has taken hold.
Hungary protests this decision and will do everything in its power to restore a lawful order.
The EU used the Article 122 of the treaty to make the freezing of the Russian assets in Europe permanent by the vote of a qualified majority in the Council of Europe where each nation has a vote. Previously that freeze was voted on every six month and required unanimity. Any country could thus veto further sanctions. Putting the freeze under Art.122 in effect deprives Hungary and others of their veto power.
The whole issue came up because Belgium, where most of the assets are frozen, has fears that any use of the Russian assets for an EU ‘loan’ to Ukraine would in the end require it to pay Russia if the sanctions were lifted. Making the freeze permanent are supposed to shield it from EU member veto.
It is very doubtful that the use of Art. 122, which is for economic emergency “in particular if severe difficulties arise in the supply of certain products, notably in the area of energy”, is applicable. The decision will likely be challenged in court:
On Wednesday, Belgian Prime Minister Bart De Wever cast doubt over the suitability of Article 122 and the existence of an economic emergency to justify its activation.
“This is money from a country with which we are not at war,” De Wever said, speaking to reporters at the Belgian parliament. “It would be like breaking into an embassy, taking out all the furniture, and selling it.”
Russia’s response to the EU shenanigans did not take long:
MOSCOW, December 12. /TASS/. The Bank of Russia has filed a lawsuit against the Euroclear depository in the Moscow Arbitration Court for damages caused to the Bank of Russia, the regulator’s press service reported.
The amount of the claim against the depository was not specified in the statement.
“In connection with the illegal actions of the Euroclear depository, which are causing damages to the Bank of Russia, as well as in connection with the mechanisms officially reviewed by the European Commission for the direct or indirect use of Bank of Russia assets without the consent of the Bank of Russia, the Bank of Russia is filing a lawsuit in the Moscow Arbitration Court against the Euroclear depository for damages caused to the Bank of Russia,” the statement reads.
The regulator stressed that the actions of the Euroclear depository caused damage “due to the inability to manage cash and securities belonging to the Bank of Russia.”
The majority of Russia’s sovereign assets frozen in Europe (over €200 billion) are blocked on Euroclear’s platform in Belgium. The depository repeatedly opposed the expropriation of the assets, warning that it could lead to Russia seizing European or Belgian assets elsewhere in the world through legal action.
Earlier Russian President Vladimir Putin stated that the global financial and economic order would be destroyed, and economic separatism would only intensify, if the West stole Russia’s frozen assets. Kremlin Spokesman Dmitry Peskov noted that Moscow would definitely respond to the theft of its assets in Europe. He stressed that the Kremlin intends to organize legal proceedings against those involved in this scheme.
Russia is following the Investor-State Dispute Settlement (ISDS) procedure through arbitration courts. This helps it to avoid seeking judgment in any potentially hostile national jurisdiction. ISDS procedure have been successfully used by Russian billionaires who had been sanctioned. The details of how they function is beyond my pay grade though Yves Smith covers a bit of it. She closes her piece with this:
In any event, pass the popcorn. Things are about to get ugly. The long-standing erosion of national rights in favor of stateless investors is being turned against its neoliberal creators.
When the war in Ukraine started it was quite obvious that it would damage NATO and probably lead to its demise. But I did not expect how much damage it would do to the EU. Brussels is de-legitimizing itself. That damage will last and may well lead to significant changes in whatever is by then left of the European Union.