Hungarian government vetoes EU loan for Ukraine
According to Politico, Hungary Prime Minister Viktor Orbán has "chosen to play hardball," using the need for his approval for Ukraine aid as leverage to secure his share of EU and recovery funds. As previously reported, the Commission has proposed to the Council to suspend more than €7 billion of Hungarian funds until the Hungarian government meets its commitments regarding the rule of law and anti-corruption strategies. The Council of Finance Ministers did not decide today on the Hungarian funds, but a decision was taken today on the joint aid for Ukraine.
The Commission will look at how to "provide the necessary solution to Ukraine already as of January," EU Budget Commissioner Johannes Hahn said during a public session of the bloc's finance ministers. This would entail something akin to so-called enhanced cooperation, a legal pathway to avoid vetoes, EU officials said. But this solution would require EU countries to provide national budgetary guarantees which, in some cases, need parliamentary approval, something that could take a fair amount of time.
Tuesday's Hungarian veto meant that decisions on all other files on the finance ministers' agenda — a minimum corporate tax rate, which Budapest is also blocking, the Hungarian recovery plan and connected €5.8 billion in grants, and the decision to freeze €7.5 billion of EU funds for Hungary over corruption issues — were postponed.
We were not able to adopt the package as a whole but we will not be discouraged,
Czech finance minister Zbyněk Stanjura said in his function of chair of the gathering of Finance Ministers. "Our ambition remains that we will start disbursements to Ukraine in January."
He tasked the Council to work on "a solution supported by 26 member states," which would get around Hungary's veto.
The Czech Presidency now has to decide on the way forward: a possible new finance ministers' summit later in December — with December 12 being floated as a possible date — or to escalate the issue to the meeting of EU leaders in mid-December, according to Politico's report.
EU governments have until December 19 to take a position on freezing EU funds for Hungary. Orbán needs to have his recovery plan adopted by the end of the year or risks losing 70 percent of the €5.8 billion grants.
The Hungarian government has repeatedly indicated that it will keep the debate on EU funds for Hungary separate from other issues, such as the global minimum tax or the aid package for Ukraine. The government has made its position clear: it is ready to support Ukraine on an intergovernmental basis, but does not support the EU proposal because it would mean another round of joint EU borrowing.
Previously, the EU has already committed hundreds of billions of euros to the recovery fund, representing the first EU-level borrowing. That regulation was accompanied by the rule of law procedure, under which the Commission has now suspended part of the funds for Hungary. At the time, in 2020, the Hungarians and Poles also vetoed joint borrowing for a long time, but a political deal was finally struck and an agreement was reached in December.
Cover photo: Getty Images
