European Union leaders failed to clinch a deal on a long-term financial package to Ukraine in talks that extended into the early hours on Friday, as Hungary’s Viktor Orbán refused to compromise.
ADVERTISEMENTThe Hungarian prime minister opposed Brussels’ proposal to provide €50 billion from EU coffers to Ukraine through 2027, a decision that requires the unanimous blessing of all EU leaders.
The €50-billion ‘Ukraine Facility’ - made up of €33 billion in low-interest loans and €17 billion in non-repayable grants - is pegged onto a broader €100-billion review of the EU’s long-term budget, known as the Multièannual Financial Framework (MFF). A group of northern countries fiercely opposed the hefty size of the top-up and bargained for a scaled-down review.
The President of the European Council Charles Michel told reporters early on Friday that all 26 EU countries, bar Hungary, had come to an agreement on “all components” of the budget revision, including the cash for Ukraine.
Sweden needed to consult its parliament before giving its final green light.
“One leader couldn't agree on this,” Michel said, in a reference to Hungary.
Leaders will get a second chance to strike a deal at an extraordinary summit expected to be held in Brussels in January.
“We will revert to this matter early next year and we will try to project unanimity in order to make it possible for us to implement this,” Michel said, also leaving the door open to the possibility of 26 member states pushing through a deal without the explicit backing of Hungary.
Several leaders also signalled they could back a support package that would not include Hungary, in order to bypass Orbán's veto. Estonia's Prime Minister told reporters as she arrived for the second day of the summit that "we are working on these ideas."
"But of course, it's much more difficult because you have to think of new instruments and that means also going to the parliaments, getting a mandate and it is more, more difficult this way," she noted.
Irish Taoiseach Leo Varadkar said that "it is possible for 26 member states to provide the money on a bilateral basis, not through the MFF, not through the European Union structures."
"But it's not where we want to be," he added.
Earlier on Thursday, EU leaders took the momentous decision to open negotiations on Ukraine and neighbouring Moldova’s accession to the bloc without Hungary's vote, despite the decision requiring unanimity.
Orbán unexpectedly dropped his veto when he was asked by German chancellor Olaf Scholz to leave the room, a prime minister confirmed to Euronews, in an unprecedented choreographed move that allowed Hungary to abstain.
Michel did not dismiss the possibility of similar political manoeuvres in January's summit.
But there are fears a decision without unanimous consensus from all 27 leaders could debilitate EU unity and set a dangerous precedent for future decisions on foreign policy.
The Hungarian premier has fiercely criticised sending further cash to Ukraine, citing fears about what he claims to be high levels of corruption in the war-torn country and calling on the bloc to rather devote its resources to making peace with Russia.
"The money for Ukraine in the short term is already in the (EU) budget. If we would like to give longer-term and bigger money, we have to manage outside the (EU) budget. And we support it," Orbán said before the negotiations on Thursday.
The failure to seal the deal comes at a pivotal time in Kyiv’s war efforts, with US funds also currently blocked in Congress amid resistance from Republican senators.
ADVERTISEMENTGovernment officials in Kyiv say the country could face a budget deficit of $43.58 billion (€39.46 billion) in 2024, with a single day of fighting costing $136 million (€124 million).
“Ukraine is in peril, Ukraine will not stand without support and ongoing support from both the European Union and the U.S., the two towers of freedom and democracy in the world,” Ireland’s prime minister Leo Varadkar said on Thursday.
“And if Ukraine doesn't have support from the EU and the US, well, then Putin will win and all of the consequences that flow for the world after that,” he warned.
Earlier this week, the European Commission released €10.2 billion in EU funds to Orbán’s government, after the money had been frozen over rule-of-law breaches in Hungary. The timing of the decision fueled speculation that the remaining frozen funds, worth around €20 billion, could be used as a bargaining chip to draw concessions from Orbán on the money to Ukraine.
Orbán’s political aide told Bloomberg earlier this week that if the EU “insists that Ukraine's financing should come from an amended EU budget”, then the issue would inevitably become intertwined with the EU funds withheld from Hungary. The EU executive maintains that Budapest has not met the necessary conditions, related to corruption and public procurement, to unfreeze further funds.
ADVERTISEMENT"I do not want to get into some type of bazaar logic where we should be trading one thing with another. This is about the security of Ukraine," Belgian prime minister Alexander De Croo warned on Thursday.
Orbán also claimed on Thursday that there was no rush to rubber stamp a new budget for Ukraine, insisting there was “already a bridging solution in the budget.”
An €18-billion support package for Ukraine, approved after hours of wrangling over Orban’s reservations in November 2022, has allowed EU assistance to trickle in every month. While the pot has dried out to €16.5 billion, some diplomats suggested it could be topped up for 2024 without the need for unanimous approval from all member states.
The EU’s top diplomat Josep Borrell has also floated using the European Peace Facility (EPF) - the bloc’s military fund for Kyiv - to bolster support to Ukraine by an additional €20 billion over the next four years.
Frugals tighten EU belt
The €50-billion package to Ukraine is part of a broader €100-billion top-up of the EU’s long-term budget, proposed by Brussels in a bid to address unforeseen costs related to migration, technological advancements, natural disasters and the rising interest rates on EU loans.
ADVERTISEMENTThe European Commission had asked for €66 billion of that pot to be fresh cash billed to EU capitals, a proposal firmly rejected by the so-called ‘frugal’ nations - including Germany, the Netherlands and Sweden - some of whom wanted to limit the top-up to the Ukraine Facility only.
Diplomatic sources said late on Thursday evening that in the latest compromise, leaders had discussed a scaled-down overall top-up to the tune of €65 billion, of which only €21 billion would be fresh money.
Southern countries such as Greece and Italy had called for more funds to support migration management and held out against a further tightening of the belt.
The EU's executive's demand for an additional €18.9 billion to foot the unexpectedly high-interest rates on loans taken out in the bloc’s €750-billion COVID recovery plan was meanwhile rejected. To avoid carving out a hole in the EU budget to cover these costs, leaders are negotiating a so-called ‘cascading’ solution that would allow them to redeploy and re-prioritise other existing funds to cover the interests.