Hungary’s new demands: EU financial aid for Ukraine hangs in the balance

PM Viktor Orbán Ukraine EU accession
Photo: FB/Viktor Orbán

Hungary has put forth fresh demands to Brussels in return for removing its veto on the EU’s proposed EUR 50 billion fund for Ukraine after the summit in December was derailed.

Hungary’s veto and its impact

The proposed envelope, known as the Ukraine Facility, was designed to provide Kyiv with financial assistance between 2024 and 2027. The original plan intended for the Facility to be operational by now. However, Hungary’s veto during the recent European Council meeting stalled the process. Hungarian PM Viktor Orbán utilised his veto power to reject the proposal, tying it to a broader review of the EU’s common budget.

This move disrupted crucial financial support at a time when both the EU and the United States were navigating challenges in approving aid packages. Despite the setback, there is a potential breakthrough on the horizon, Euronews writes. EU leaders have scheduled a reconvening on 1 February, offering another opportunity to reconsider the Ukraine Facility.

Hungary’s demands

Ahead of this critical date, Hungary has put forward two key demands. Firstly, Hungary suggests dividing the EUR 50 billion package into four annual envelopes, each worth EUR 12.5 billion. However, this proposition introduces a risk as it requires unanimous approval every year. It potentially allows a single member state to block aid in subsequent years.

Secondly, Hungary demands a two-year extension for accessing EU COVID-19 recovery funds, citing restricted access to its national plan over rule-of-law concerns. With EUR 10.4 billion in its recovery plan and EUR 11.5 billion in frozen cohesion funds, Hungary insists on unfreezing the total EUR 20 billion before considering the Ukraine Facility, denouncing the situation as “financial blackmail”.

Hope amidst challenges

Despite challenges, Hungary’s engagement in discussions and proposal of alternatives signals a more constructive atmosphere. Ambassadors have approved a “partial negotiating mandate,” allowing formal talks to commence once a solution for the Ukraine Facility is reached. However, if the 27 member states fail to reach an agreement in February, Brussels may need to devise an alternative scheme outside the EU budget to ensure continuous financial support for Ukraine. Orbán, in a recent social media post, seemed to welcome this contingency plan, referring to it as the “Hungarian plan A.”

Italian PM’s role in potential resolution

According to Bloomberg, press reports indicate that Giorgia Meloni is attempting to broker a deal with Viktor Orbán. Meloni is reportedly urging Orbán to cease blocking EU aid to Ukraine and improve relations with Zelenskyy. In exchange, Meloni would pave the way for Orbán’s Fidesz party to join the European Conservatives and Reformists (ECR) party family, of which she is a leader.

Meloni is not only seeking Orbán’s cooperation on EU aid but is also pushing for a change in Orbán’s stance on Ukraine’s potential EU membership. Anonymous sources familiar with the matter indicate that these conditions are prerequisites for Fidesz to join the ECR. Discussions have occurred at various levels, but a definitive decision is still pending. Orbán’s press secretary has not responded to inquiries, and Meloni’s office has declined to comment on the ongoing negotiations.

Fidesz’s political shift and ECR membership talks

Fidesz, having left the European People’s Party (EPP) in 2021, has not been affiliated with any political group since. Orbán has emphasised ongoing negotiations to join the ECR, a group that includes Meloni’s party, the Italian Brothers and Poland’s Law and Justice (PiS).

The upcoming weeks will be critical in determining whether Hungary’s demands are met and potential compromises are reached. It will also decide the fate of EU financial aid for Ukraine.

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Source: Euronews, Bloomberg

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