EU faces showdown with Hungary’s Orban over crucial aid for Ukraine to fight Putin’s forces

The European Union has made a last-ditch attempt to convince Hungary and its pro-Kremlin leader to cease blocking further aid to Ukraine by offering the chance to debate funding annually.

EU ambassadors, following a meeting on Wednesday ahead of a summit of the bloc’s leaders on Thursday, agreed to the proposal of an annual debate over the package to Ukraine worth around €50 billion (£43bn), according to a draft summit.

The EU aid is to help cover Ukraine’s needs for 2024-2027, with €33 billion in cheap loans and €17 billion in grants from the bloc’s budget to give Kyiv stable financing as it fights off Russia’s invasion. It is not a military package.

Hungary is the only country out of the bloc’s 27 members that opposes the bill.

The country’s prime minister, Viktor Orban, has been pushing for an annual review that would give Hungary a right to veto the disbursements every year.

This goes against the idea of predictable funding and other EU countries reject it, but if the money is to come from the EU budget, it requires unanimity among the 27 EU countries, so Hungarian consent is necessary.

After nearly two years of Russian aerial attacks, Ukraine needs EU funding to help stabilise and rebuild the economy

In an attempt to win Hungary over, the EU ambassadors agreed to propose to Budapest that they hold yearly debates on how the bloc money is being spent by Ukraine, based on reports by the European Commission.

This would not give Hungary a right to veto the money – but it would allow them to air concerns.

“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,” the draft read.

It was not clear if Hungary’s Prime Minister Viktor Orban will agree to such a deal on Thursday.

But Hungary’s representative at the EU ambassador meeting allegedly responded to the proposal by reiterating that Budapest demands an annual veto on the funding.

Multiple attempts to convince Hungary to give its consent have failed over the past few months.

The latest, which played out on Sunday, included a plan to strong-arm the country into approving the bill by threatening to permanently shut off all funding to Budapest.

After that plan was leaked on Sunday, Mr Orban accused Brussels of trying to “blackmail” him.

“We made a compromise proposal,” he said. “In return, we were blackmailed by Brussels.”

EU diplomats told Politico last week that if Mr Orban blocks Ukraine aid again during the meeting on Thursday, Brussels could look to invoke Article 7, the most serious political sanction on a member country that involves suspending its right to vote on EU decisions.

“If Mr Orban really blocks again an agreement [on the budget and the €50 billion for Ukraine] at the February summit, using Article 7 to strip Hungary of its voting rights could become a real option,” said one EU diplomat.

During the last round of talks, Mr Orban refused to back down despite the EU releasing €10.2bn of bloc funding to Hungary the night before the meeting. The money had been previously withheld on grounds that Mr Orban was violating the rule of law prerequisites of EU membership.

After those talks concluded with no deal on Ukraine aid, Mr Orban told Hungarian state radio: “[The EU] wants to give the money of the Hungarians to continue the war. This is not acceptable.”

He did, however, allow Ukraine and Moldova to start membership to the bloc talks; he did so not by approving the application but by going “for a coffee” while the vote was taking place.

European Council President Charles Michel said at the time it was important that “no member states opposed this decision”, a reference to Mr Orban’s lack of approval.

Failure to pass additional aid to Ukraine would force the bloc to rethink again how best to fund the prospective member in its war against Russia.

The most obvious option would be to extend an existing loan scheme for 2024, which does not require unanimity.

The 26 countries would need to set up two intergovernmental schemes to allow the bloc to transfer grants and loans to Ukraine, but this would require parliamentary approval from individual countries.

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