On Tuesday, the Orbán cabinet blocked an agreement on a EUR 18 billion aid package for Ukraine at a meeting of finance ministers in Brussels.
It required a vote on three pieces of legislation, but Finance Minister Mihály Varga indicated he would not agree to the amendment to the joint financial regulation, which required unanimity, so the package as a whole could not be adopted.
The EU candidate country, under attack from Russia, is estimated to need EUR 3-4 billion a month in aid. The EU would contribute roughly half of this, which would be accessible from the beginning of next year, rather than the ad hoc aid that has been provided on a piecemeal basis.
The Hungarian government has already indicated in advance that it did not support joint borrowing. Government members have stressed that they were not discussing aid, but rather – on principle – the EU borrowing together. Instead, they would give Ukraine its share of the EU’s GDP bilaterally, and sought to show by a government decision that they meant it.
However, this solution would require EU countries to provide national bug guarantees, which in some cases require parliamentary approval, which could take some time.
The EU could borrow together more economically, which – because of its relatively small GNP – would cost the Hungarian government less than, say, Italy.
Tuesday’s Hungarian veto meant that decisions on all other issues on the finance ministers’ agenda – the minimum corporate tax rate, which Budapest is also blocking, the Hungarian recovery plan and its €5.8 billion subsidies, and the decision to freeze €7.5 billion in EU funds for Hungary because of corruption problems, were postponed.
As we wrote before, EC last week said it had decided to give its support for the adoption of Hungary’s plan for accessing EU recovery funding worth 5.8 billion euros, though the EC would continue to freeze 7.5 billion euros in cohesion funding, details HERE.
Czech presidency: solution supported by 26 EU members
Czech Finance Minister Zbyněk Stanjura, chairing the finance ministers’ meeting, tasked the Council to work on “a solution supported by 26 EU members” that would bypass Hungary’s veto.
Possible scenarios: a new finance ministers’ summit in December, or the issue being put to EU leaders in mid-December.
Explanation after Hungary’s veto: aid to Ukraine is not fair – UPDATE