EU explores emergency Ukraine funding outside bloc’s shared budget

EU diplomats are discussing technical proposals to raise emergency funding for Ukraine outside of the bloc’s shared budget, as Hungary vowed it would not yield to pressure to drop its veto on a support package critical for Kyiv.

Hungarian Prime Minister Viktor Orbán has said he would block Brussels’ bid to provide a critical €50 billion financial aid lifeline to Ukraine and approve formal talks on the country joining the EU at a summit of its leaders on Thursday. His stance comes in spite of efforts by the Ukrainian president, Volodymyr Zelenskyy, and other EU capitals to persuade him, The Financial Times reports.

Failure by the EU to agree the proposed funding package would severely affect Ukraine’s financial stability, Ukrainian and European officials have warned. It would also mark the most egregious reversal in Brussels’ support since Russia’s full-scale invasion of Ukraine in early 2022, amid uncertainty over a similar-sized funding package in the US.

EU officials are working on possible solutions to overturn Hungary’s block on the package, which require unanimity, including the release of bloc funds earmarked for Budapest but currently frozen on rule of law concerns.

With time running out before the summit begins, diplomats have also begun private talks on the feasibility and technical details of potential financial package between the other 26 members, people briefed on the discussions told the Financial Times. This would provide Kyiv with emergency funding for at least a year.

The talks, involving officials from the European Commission and large member states that would saddle most of the cost, are being kept confidential to avoid undermining the primary objective of overturning Budapest’s veto, given Orbán has said he has no objection to other EU countries providing aid.

An off-budget instrument would take more time and cost more money in interest and other costs, the people said. One added: “Nobody wants to do this if we don’t have to . . . But it would be reckless not to have a plan B.”

Orbán’s EU minister, János Bóka, told the FT that Hungary was insistent that any aid for Ukraine could not come from the EU’s joint budget, and that a decision on membership talks must wait until the European parliament elections in June.

“Hungary will not change its mind,” Bóka said. “We can talk about the period after the December summit with member states [but] I do not see any factor that would change our decision, which is rooted in principle.”

Olha Stefanishyna, Ukraine’s deputy prime minister, said on Monday that Ukraine had received no assurances that the €50 billion would be provided in one form or another, and that any alternative would challenge the country’s stability.

“In the case of no decision on the €50 billion, there could be an interim solution,” she told reporters, but it would leave Ukraine on “the edge of survival with zero [financial] predictability for the whole year”.

An inability to agree the support package and to open membership talks would be seen by Kyiv as “a failure of the whole EU”, she added.

The commission is set to give in-principle approval to unfreeze more than €10 billion in EU budget funds it has withheld for rule of law and graft concerns with Orbán’s government. Multiple EU officials said reforms Budapest has enacted meant it deserved the cash, but that approval would be helpful in the wider effort to persuade Orbán to change his course on Ukraine.

But any formal or informal link between the two issues would “amount to political blackmail not from Hungary, but against Hungary, which we reject”, Bóka added.

Stefanishyna said Orban had implied in an impromptu conversation with Zelenskyy over the weekend that unlocking Hungary’s EU cash was one aspect of his positioning regarding Kyiv.

Bóka said in response: “Hungary is playing with an open hand.”

Orbán has opposed aiding Ukraine’s effort to fight off Russia’s invasion by arguing that more money did not translate into improvements of Ukraine’s battlefield positions. A protracted war dooms both Kyiv and Europe’s long-term interests, he has said, costing lives and economic opportunity.

“We think the Ukraine assistance tool should be created outside [the EU budget] with member state contributions, mutual member state guarantees, a much shorter planning period of one year instead of four years, under the clear political leadership of the member states,” Bóka said.

Ukraine’s membership prospect was even more divisive among Europeans, according to Bóka, who said “a third of EU member states harbour very serious reservations about this”.