Hungary might lift its Ukraine aid package veto, but with strings attached

EU member states agreed on Wednesday (10 January) on a partial negotiation mandate to start talks with the European Parliament on a €50 billion aid package for Ukraine, but the threat of Hungary raising obstacles along the way has not faded.

Four diplomats confirmed to Euractiv that the Belgian EU Council presidency was given a partial negotiating mandate to start talks with the Parliament to establish the Ukraine Facility, a new single dedicated instrument to support Ukraine’s recovery, and the Strategic Technological European Platform (STEP).

This comes after EU leaders failed in December to unanimously greenlight the €50 billion fund that would help keep Ukraine’s economy afloat after Hungary vetoed it.

Instead, EU leaders are looking towards a tough emergency summit on 1 February to have another go at agreeing on the package.

Since December, EU countries have been piling pressure on Budapest to move on the issue, especially as the US is also struggling to approve its own Ukraine funding.

Last week, European Commission President Ursula von der Leyen said reaching a deal, which requires the support of all EU member states, was “the first priority.”

“But of course, we have to prepare for other options (…) there are the operational solutions that we are preparing right now,” she then said.  

The European Commission intends to present these solutions to EU leaders at the 1 February summit and, should they come to a budget compromise, the Belgian presidency is expected to work out the technical details.

De-escalation, but Orbán’s veto remains

A first step of de-escalation already happened when Hungary submitted a compromise proposal for a meeting of EU27 budget officials last Friday.

In it, Budapest signalled it could approve the funding as long as EU member states would be asked to approve annual financial envelopes unanimously, instead of a one-time decision on the fund, according to four EU diplomats.

Hungary also proposed €12.5 billion in grants and loans every year to Ukraine, while the original European Commission proposal of €50 billion was meant to comprise €17 billion in grants and €33 billion in non-budget loans until 2027.

The proposal was, however, seen as a small olive branch extended by Prime Minister Viktor Orbán, although EU diplomats caution that they expect Hungary would still intend to block the overall process where it can.

A number of EU countries are against the idea of deciding the issue on a year-to-year basis as they believe it would deny Ukraine long-term planning ability.

On Wednesday, Hungary again maintained its demand to split the €50 billion package into tranches that would be put under an annual review and then voted on a yearly basis, three diplomats confirmed.

“It would be an annual veto right”, one EU diplomat said, in reference to the fact that the Hungarian proposal would still offer Orbán the chance to block a deal every year.

“Hungary wants to make the annual preview a pre-condition to give their agreement to the review of the EU budget as a whole”, a second EU diplomat said.

Technical work-around 

While EU budget questions must be settled unanimously by all 27 EU countries, the creation of the fund in itself is a decision requiring a qualified majority only.

“This way, the inter-institutional negotiations can start and be concluded as soon as possible, so that the EU’s financial assistance to Ukraine can be secured as soon as possible,” the third EU diplomat said.

The fourth diplomat explained: “To put it simply: as there is no unanimity yet about the multi-financial framework, we can only proceed with qualified majority voting on the facility regulation. But before there is unanimity, the facility does not have the money.”

As a consequence, Belgium as the chair of the EU’s rotating Council’s presidency “can now negotiate everything but the headline figures”, the diplomat added.

[Edited by Zoran Radosavljevic]

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