EU mulls over alternative Ukraine funding plan to bypass Hungary veto

BRUSSELS - European Union countries are considering a backup plan to push through much-needed aid for Ukraine in its fight to repel Russia, in case Hungary vetoes the current €50 billion (S$72.5 billion) funding proposal.

The proposal would involve national guarantees from member states to raise funding in the markets should Budapest block the review of the EU’s long-term budget, which includes the package and requires unanimity, according to people familiar with the discussions.

Kremlin-friendly Hungarian Prime Minister Viktor Orban has refused to supply arms to Ukraine and repeatedly said Kyiv’s counter-offensive is doomed to fail, irking other EU capitals. So far, he has been unwilling to back a new EU aid package for Ukraine.

At the same time, Mr Orban is banking on the release soon of at least some of the more than US$30 billion (S$40.8 billion) in EU funds for his country that the bloc froze in 2022 over concerns about democratic backsliding.

For Ukraine, the extended debate in Brussels over 2024’s aid package is unsettling, with the US Congress also at a stalemate over providing more assistance, particularly military aid, to Kyiv. 

Speaking to European Parliament lawmakers on Tuesday, EU budget commissioner Johannes Hahn said the bloc cannot be blackmailed by any holdout members.

“Of course you can make things more complicated, more cumbersome if you need unanimity, but we have seen in the past, being crystal clear, that you cannot stop us on doing things,” he said.

“Of course it might be more complicated, thinking about Ukraine. Of course, we can find a solution which is only including 26 member states.”

Some countries are in favour of finding an alternative solution soon for Ukraine funding in order to increase the pressure on Mr Orban, said the sources, who spoke on condition of anonymity.

But Spain, which holds the rotating EU presidency, and the European Commission, the bloc’s executive arm, favour an agreement within the long-term budget, the sources added.

Fears about a possible Hungarian veto and discussion over how to circumvent it come as Budapest calls for a comprehensive discussion about the effectiveness and sustainability of the EU’s existing Ukraine strategy, which it argues is not bringing results, the sources said. 

Hungary told member states this week it wants an assessment of the amount of financial aid, and risk factors such as corruption, the sources added.

Commission officials did not immediately reply to a request for comment. 

Hungary accused the EU of trying to blackmail it by purportedly tying the release of EU funds to Budapest’s blessing for more aid to Ukraine – something EU officials have repeatedly denied.

“We see an attempt at blackmail on the part of Brussels,” Cabinet Minister Gergely Gulyas told reporters on Thursday.

“The commission hasn’t decided whether we’ve complied with their conditions (for the release of funds), obviously with the aim of tying it to other files, such as aid to Ukraine or the budget review.”

Hungary is “ready to discuss” the EU budget – “even aid to Ukraine in the short term of six months to a year” – but will not agree to start EU membership talks with Kyiv, Mr Gulyas said. BLOOMBERG