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Europe Set for Showdown With Hungary’s Orban in Push to Unblock Ukraine Aid
(Bloomberg) -- European Union leaders meeting in Brussels will push Hungarian Prime Minister Viktor Orban to drop his veto on much-needed financial aid for Ukraine, with some accusing him of “blackmail” against the bloc.
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Failure would deal Kyiv a severe blow and fuel doubts about the commitment of its allies, particularly with US assistance stalled in Congress.
“Viktor definitely wants to be the center of attention every time we’re here, but it shouldn’t be like this,” Estonian Prime Minister Kaja Kallas told reporters as leaders gathered on Thursday. “I don’t want to use the word ‘blackmail,’ but I don’t know a better word.”
The EU has offered Budapest a new mechanism for monitoring the bloc’s €50 billion ($54.2 billion) aid package for Ukraine. But several countries have ruled out an annual veto that the Hungarian prime minister has demanded to add to that review tool for disbursements.
It will all come down to Orban himself, who has angered his counterparts in the 27-member bloc by stonewalling a pillar of Europe’s security strategy aimed at containing Russian President Vladimir Putin.
German Chancellor Olaf Scholz said leaders should focus on an agreement that includes Hungary rather than stoke speculation about a work-around to circumvent an Orban veto.
“I’ve felt in my talks with many that we want to find an agreement with 27,” Scholz told reporters. “Therefore we shouldn’t try to glue together any other constructions now.”
Hungary, whose access to significant EU funding has been blocked over rule-of-law concerns, is also complicating efforts to provide military support to Kyiv just as the EU is well short of its pledge to provide Ukraine with 1 million rounds of artillery ammunition by March.
Ukraine is running short of weapons as Russia’s invasion heads into a third year. Reports from the frontlines suggest Ukraine is struggling to hold Russian forces back, while an ugly dispute has broken out between Volodymyr Zelenskiy, and his commander-in-chief, Valeriy Zaluzhnyi — heightening the sense of crisis in Kyiv.
Ukrainian Defense Minister Rustem Umerov sent a sharp warning to his EU counterparts this week that his country’s forces are now outgunned three to one by the Russians. In a letter seen by Bloomberg, he added that Kyiv needs at least 6,000 artillery rounds daily, but is unable to shoot more than 2,000 shells along a 1,500-kilometer (932-mile) front.
Read more: EU Acknowledges Months of Delay for Ukraine Ammunition Pledge
For many capitals, the anxiety level is high because Putin’s expansionary ambitions toward the West have made support for Ukraine’s war efforts an existential issue, said one senior EU official.
“If Ukraine fails and Russia feels bolstered, it will try to attack other countries,” European Commission Vice President Valdis Dombrovskis warned Tuesday in Washington. “That would simply mean a much bigger war with NATO.”
If member states can’t salvage a deal with Hungary, it could also trigger a strong push to punish Orban for his intransigence, which would probably trigger another slide in the forint. One option under discussion would be suspending Hungary’s voting rights by taking the drastic step of invoking Article 7 of the EU treaties, although some countries are queasy about taking such a confrontational step, according to people familiar with the matter.
“There’s no problem with Ukraine fatigue, we have Orban fatigue now,” Polish Prime Minister Donald Tusk said, lashing out at the Hungarian leader for playing an “egoistic game.” “There’s no room for compromise,” he said.
Adding to the tense atmosphere inside the EU’s summit are protests by farmers, who staged a demonstration nearby — with Brussels’ city center full of tractors parked near EU institutions — to protest the bloc’s green policies and trade liberalization measures.
Some of the protests, which have spread across Europe over the past months, have been supported by organizations with ties to Orban.
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EU diplomats spent the past few days trying to address Hungary’s demands on the aid package and ensure a smooth summit meeting. But there are no signs of progress yet, including at a dinner with most EU leaders in Brussels late Wednesday. Orban met with leaders including Scholz, French President Emmanuel Macron and Italian Prime Minister Giorgia Meloni.
“In the end there are reasons for Viktor Orban himself to come to a conclusion with the 27 — and he knows it,” Dutch Prime Minister Mark Rutte told reporters. He said he was “cautiously optimistic” a deal would be reached.
The EU offered to hold an annual debate at the leaders’ level on the implementation of the reform package “with a view to providing guidance on the EU approach towards the situation stemming from Russia’s war of aggression against Ukraine,” according to the draft summit conclusions seen by Bloomberg News.
Hungary, however, reiterated to EU envoys on Wednesday that it wants an annual vote requiring unanimous support to release the funding, which would give it veto power over the transfers, an EU diplomat said. Other member states oppose this option because it would jeopardize their efforts to provide stable and predictable funding to the Ukrainian government.
Budapest also wants to cap the maximum amount of loans per year for Kyiv to €9 billion, while non-refundable grants should not exceed €5 billion annually, according to a proposal Hungary shared with EU nations and seen by Bloomberg.
Read more: EU Pursues Last-Minute Deal With Hungary on Ukraine Aid
Several senior EU diplomats believe that Orban is trying to use his leverage to blackmail the rest of the bloc and force it to unblock some of the €20 billion in EU funding held up over concerns related to the rule of law and the protection of fundamental freedoms. Hungary also wants to extend the deadline for separate EU Covid recovery funds by two years.
Orban has two options to get the money: meet the milestones to unlock the funds or force the EU to back down, and he prefers the latter, one of the diplomats said.
The EU’s executive arm could unfreeze around €10 billion, one diplomat said, but Hungary would still need to meet the bloc’s conditions on rule of law.
“No one can blackmail 26 EU member countries,” Finnish Prime Minister Petteri Orpo said.
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While EU leaders insist their primary aim is a unanimous deal on Ukraine aid as part of the bloc’s broader review of its long-term budget, officials are also preparing for a Plan B.
The options to circumvent Orban would be more complex and limited but the goal would be to provide Ukraine the badly needed financing by Feb. 24, the two-year mark of Russia’s invasion, an EU official said.
In that case, the EU would prolong an existing facility for the rest of this year, although the technical details would be worked out after the summit, a senior EU diplomat said.
--With assistance from Milda Seputyte, Piotr Skolimowski, John Follain and Katharina Rosskopf.
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