EU funds 4 March 2025, 9:30am

Hungary could scupper major EU plan

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Negotiations on a new EU aid package for Ukraine have hit a snag, with Hungary expected to veto the proposal and other member states open to reconsideration. At the same time, European Commission President Ursula von der Leyen is looking for more creative ways to support Ukraine, while a decision to increase EU defence spending could be taken. The developments suggest that European leaders have not found a clear solution to fill the gap left by the US, and the future of military assistance remains uncertain.

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Commission President Ursula von der Leyen is set to debut her toolkit for boosting EU defense spending at 9:15 a.m.. But the other big item on the agenda for the European Council summit — a huge new infusion of aid for Ukraine — is in doubt. The EU is not expected to fill the gap left by the US, and Hungary is expected to veto another aid package, Politico reported on Tuesday.

Hungary is expected to take the blame for putting a €20 billion surge to Kyiv on ice. Budapest may be more on board with the EU’s broader defense ramp-up, but it is dead against the Ukraine package.

Over the weekend, Prime Minister Viktor Orbán wrote to António Costa, President of the European Council, asking him not to include any issues on the agenda of the 6 March summit that require a resolution or a consensus decision. The Hungarian Prime Minister said that in the interests of peace he was opposed to any further steps that could escalate the war in Ukraine.

An explicit reference to fresh delivery of military funding proposed by foreign policy chief Kaja Kallas has been cut from the latest draft of the Council conclusions, set to be vetted today by EU ambassadors and seen by Politico. The change comes after Budapest vetoed the previous version when those ambassadors last met.

In a letter, Costa appeared to concede defeat in his campaign (which included a lengthy lunch in Budapest) to get Hungarian Prime Minister Viktor Orbán on board for this aid package.

“I note that there is a divergence on the path to achieve peace and, in particular, the ‘peace through strength’ approach,” Costa wrote to Orbán on 3 March. At the same time, Costa noted “broad agreement” on the need for Europe to become “more sovereign, more capable and better equipped” to deal with security challenges.

Orbán and Slovakia’s Robert Fico have made their objections public. Yet diplomats say behind the scenes that other capitals — including Paris — are just as happy to see the funding package slow-walked.

Von der Leyen is likely to propose more creative ways to make reluctant member countries support Ukraine, rather than providing aid.

One possibility, according to a diplomat, would be to require that 20% of the new loans available for defense spending be put toward helping Kyiv. The EU has already committed €60 billion in military aid to Ukraine for 2025. That money is not in question.

While the reference to the Kallas funding boost is gone, the language on the security guarantees has been strengthened in the new draft. In a reversal, France has started discussing using seized Russian assets as leverage to force Russia to stick to an eventual cease-fire, the Financial Times reports.