POLITICO: Hungary’s veto undercuts EU Plan B for financing Kyiv

On December 5, Hungary formally ruled out the possibility of issuing eurobonds to support Ukraine, eliminating what had been viewed as a potential fallback option for the EU if it fails to secure agreement on using frozen Russian state assets to provide a €165 billion loan to Kyiv.

The European Commission is urging all 27 EU member states to endorse, at a summit later this month, a major financial package aimed at stabilising Ukraine’s struggling economy. The plan is based on leveraging immobilised reserves of the Russian central bank. However, Belgium — which holds the largest portion of these frozen assets — has strongly resisted the idea, warning that it could face financial liability if Russia were to pursue legal action.

Eurobonds had been considered as an alternative mechanism for funding Ukraine, but Budapest rejected the proposal to issue joint EU-backed debt tied to the bloc’s seven-year budget, according to two diplomats who briefed POLITICO after a meeting of EU ambassadors.

Hungary’s refusal came just hours before a scheduled dinner in Brussels between German Chancellor Friedrich Merz and Belgian Prime Minister Bart De Wever, who were set to discuss the loan plan.

Merz said ahead of the meeting that he intended to use the occasion to win De Wever’s support.

“I take the concerns and objections of the Belgian prime minister very seriously,” Merz told reporters on Thursday night. “I don't want to persuade him, I want to convince him that the path we are proposing here is the right one.”

In an effort to secure Belgium’s backing, Germany has offered to guarantee 25 per cent of the loan. But De Wever is demanding a broader commitment from all EU members that Belgium will be protected for the full amount — or potentially more — should any legal or financial risks materialise.

The Commission put forward eurobonds on Wednesday as one of two potential solutions, alongside the loan backed by frozen Russian reserves, to ensure that Ukraine does not run out of critical funding by next April.

However, issuing debt through the EU budget requires unanimous approval, and Hungary’s veto now intensifies the pressure ahead of what are expected to be difficult negotiations before EU leaders convene in Brussels on December 18.

Officials indicated that no immediate progress was expected, given the Belgian prime minister’s strong reservations.

The Commission has repeatedly attempted to downplay both the financial exposure and legal risks tied to the reparations-based loan, insisting that its proposal adequately addresses most of Belgium’s concerns.

Under the plan, €115 billion would be allocated over five years to strengthen Ukraine’s defense industry, while an additional €50 billion would be directed to support Kyiv’s budgetary needs.

By Tamilla Hasanova