EU Leaders Seek Deal to Fund Ukraine as Hungary Digs in Heels

Reuters

16:59 JST, February 1, 2024

BRUSSELS, Feb 1 (Reuters) – European Union leaders will seek on Thursday to convince Hungarian Prime Minister Viktor Orban to join a plan to offer stable financing to Ukraine, but they are also ready to provide the cash to Kyiv without Hungary if their arguments fail.

The plan is to help cover Ukraine’s 2024-2027 needs with 33 billion euros ($36 billion) in loans and 17 billion euros in grants. The money is to come from the EU budget to give Kyiv more predictable funding as it fights off Russia’s invasion.

The EU has been helping Ukraine since Moscow invaded in 2022, but so far it has been through intergovernmental deals that require national approvals every year and are more costly and complex than funding through the EU budget.

The stability of the four-year financing the EU budget would provide is all the more important at a time when financial assistance from the United States, another large aid provider to Ukraine, is uncertain because of infighting in the U.S. Congress.

To use the EU budget, all 27 member countries have to agree, and Hungary, which cultivates close ties with Moscow, wants to be able to veto the disbursements every year. The other 26 EU countries have rejected Hungary’s demand, and they and Hungary have been in a stand-off since December.

The summit on Thursday, called to resolve the issue, is the last opportunity to reach a deal before abandoning the EU budget as a way to fund Ukraine and return again to the more complex, costly and less predictable financing used previously.

The EU cannot wait any longer because Ukraine is expected to run out of cash to run normal state functions in March.

To partially accommodate Orban’s demands, the leaders will suggest holding an annual debate on how the EU aid is spent by Ukraine, without giving Hungary the right to veto the money, a draft proposal prepared for the Thursday meeting showed.

“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 said.

It is not clear if Orban will agree to such a deal. Orban’s ambassador to the EU told his counterparts at a preparatory meeting on Wednesday that Budapest still wanted veto power.

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