European Union leaders are set to reconvene in Brussels on February 1, aiming to find a consensus on providing new financial aid to Ukraine amid Russia’s ongoing aggression. Last month, Hungary vetoed the extension of 50 billion euros ($55 billion) to Ukraine via the EU budget through 2027. The Hungarian Prime Minister, Viktor Orban, has suggested the possibility of an agreement, but tensions persist.
Option 1 – Deal Among All 27 EU Nations Within Joint Budget
The initial proposal, labeled the EU’s “Plan A,” involved an extension of the joint 2024-2027 budget, allocating 50 billion euros for Ukraine. However, Orban, expressing concerns about committing funds for an extended period amid the unpredictable situation, vetoed the plan. He emphasized that supporting Kyiv should not jeopardize the EU budget.
Option 2 – Deal Among the 27 Outside EU Budget
A secondary option under consideration is creating a special financial vehicle outside the shared EU budget. This involves member states offering financial guarantees against which the European Commission would borrow funds on the market. Budapest, previously against loans for Ukraine, welcomed this approach, suggesting it as a viable alternative. Hungary advocates for commitments based on countries’ gross national income and annual agreements for assistance to Kyiv.
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Option 3 – 26 Move Ahead Without Hungary
In response to Hungary’s persistent obstruction, the other 26 EU member states are contemplating moving forward without unanimous agreement. This could entail individual commitments to support Kyiv, but it poses challenges in terms of complexity, cost, and stability compared to a united approach under the EU umbrella. This option also raises concerns about a potential rift within the EU over Russia’s invasion of Ukraine.
Anticipated Summit and Possible Upset
While optimism surrounds the upcoming EU leaders’ summit on February 1, cautiousness prevails. Observers are hopeful for an agreement, but unexpected developments leading to an upset are not ruled out. The dynamics of the negotiations remain fluid, and any unforeseen turn of events could influence the outcome.
Implications for EU Funds for Hungary
Parallel to the aid discussions, tensions persist between the EU and Hungary over democratic principles. The EU suspended a significant portion of funds earmarked for Hungary due to concerns about the erosion of democracy under Orban’s leadership. Approximately 10 billion euros were unlocked in December to gain Hungary’s support for Ukraine, but a substantial amount remains frozen. The frozen funds are linked to Hungary’s policies regarding migrants and the rights of the LGBTQ+ community, further complicating the broader EU-Hungary relationship.
