In a crucial summit on Thursday, European Union leaders are working to secure a funding plan for Ukraine, with a focus on convincing Hungarian Prime Minister Viktor Orban to align with the proposed strategy. However, EU leaders are prepared to move forward with financial support for Kyiv, even if Hungary remains opposed to the plan.
Stable Financing Plan for Ukraine
The primary objective of the proposed plan is to provide stable financing for Ukraine, covering its needs for the period 2024-2027. The financial package includes 33 billion euros ($36 billion) in loans and 17 billion euros in grants, sourced from the EU budget. This approach aims to offer Kyiv more predictable funding as it confronts the ongoing conflict with Russia.
Challenges with Current Assistance Methods
While the EU has been actively assisting Ukraine since Russia’s invasion in 2022, the existing assistance mechanisms involve intergovernmental deals that necessitate annual national approvals. These methods are perceived as more cumbersome and costly compared to utilizing the EU budget for streamlined funding.
Uncertainties in U.S. Financial Aid
With uncertainties surrounding financial assistance from the United States due to internal disputes in the U.S. Congress, the stability provided by a four-year financing plan through the EU budget becomes increasingly crucial for Ukraine’s ongoing operations.
Hungary’s Veto Demand Raises Tensions
To implement the EU budget for Ukraine, unanimous approval from all 27 member countries is required. Hungary, maintaining close ties with Moscow, has insisted on the right to veto disbursements annually, a demand rejected by the other 26 EU nations. This disagreement has led to a standoff since December, prompting the current summit to address the issue and seek a resolution.
Critical Deadline for Funding Decision
The urgency of reaching a decision stems from the impending financial constraints faced by Ukraine, anticipated to exhaust its resources for normal state functions by March. Faced with this time-sensitive scenario, EU leaders are motivated to secure an agreement on funding Ukraine through the EU budget during the current summit.
Compromise Proposal to Address Hungarian Concerns
In a bid to address Hungary’s concerns without granting veto power, EU leaders are considering an annual debate on how EU aid is utilized by Ukraine. The proposed compromise, outlined in a draft prepared for the summit, suggests, “The European Council will hold a debate each year on the implementation of the facility with a view to providing guidance on the EU approach towards the situation stemming from Russia’s war of aggression against Ukraine.”
As leaders engage in strategic discussions, the outcome of the summit will determine the financing approach adopted for Ukraine, balancing the need for stability with the complexities of EU decision-making processes. The looming deadline and geopolitical sensitivities add layers of significance to the ongoing negotiations.