Brussels’ final warning to PM Orbán: Hungarian economy at risk if he vetoes
The European Union is contemplating sanctions against Hungary, potentially impacting the nation’s economy. Prime Minister Orbán faces a crucial decision on the 1st of February, necessitating careful planning to avert endangering the country’s economic well-being.
An extraordinary summit on the 1st of February, featuring EU Leaders, is poised to address the next financial aid package for Ukraine, an event of undeniable importance for both Ukraine and Hungary. This summit assumes significance due to the EU’s reported intention, as per the Financial Times, to address Prime Minister Viktor Orbán’s previous veto of the financial aid package in December. The EU plans to extend 50 billion euros to Ukraine through joint borrowing by member states, a move contested by Orbán, who vowed to veto the package regardless of conditions. Recent alterations in the EU’s financial structure grant the European Council a voice in the Recovery and Resilience Facility (RFF), a departure from the exclusive management by the European Commission.
The reason behind the EU’s plan to use joint borrowing for the 50 billion euros is the cost-effectiveness and potential political risk reduction, avoiding the need for approval from each nation’s parliament if states were to borrow individually.
The risk of the aid not materialising poses a significant threat to Ukraine, relying on foreign financial aid since the Russian attack. The vetoing of this package could lead to further deterioration of the Hungarian-Ukrainian relations and may distance Hungary from other member countries. There are already talks about additional sanctions if the Prime Minister decides to veto the financial bill. This time, it may not directly affect the economy, but it could harm the nation just as much as the previous one.
Although this is currently just a plan and no actions have been taken, the news has already prompted a drop in the value of the already weak forint and a decrease in the price of OTP stocks.
This could also interest you:
- Read more about another sanction which Hungary might face in the EU HERE
- Read about Hungarian forint the weakest this year HERE
Reactions from the Orbán government
The Hungarian government “will not give in to blackmail”, the minister of European affairs said on Facebook on Monday, in reaction to press reports suggesting that EU members could try and withhold community funding from Hungary “unless the EU summit on February 1 passes a decision on aid to Ukraine”.
János Bóka said the reports “support the Hungarian government’s assertion that Brussels uses access to funding for exerting political pressure”.
“Hungary does not link aid to Ukraine with its accessing EU funds and rejects others’ doing so. Hungary has been a constructive participant in negotiations and will not give in to blackmail,”
the minister said.
“Brussels uses blackmail against Hungary as if there were no tomorrow”
– Prime Minister Orbán’s political director Balázs Orbán wrote on X (formerly Twitter) on Monday in response to a Financial Times article last weekend.
UPDATE
EU commissioner: If situation in Hungary worsens, EC could block funds again