European Union is at a crossroads due to Hungary’s blockade of the €50 billion financial aid earmarked for Ukraine. Faced with this situation, the EU is ready to activate a plan B to support Ukraine economically without Hungary’s participation.
Worrying situation in Ukraine
Situation in Ukraine is becoming increasingly worrisome. The latest large-scale attacks and small gains of ground by Russian troops, coupled with the country’s economic problems, demonstrate the importance of European support at this critical time.
However, Hungary’s blocking of financial aid has generated great concern in Brussels.
EU proposal and Hungary’s blockade
In the face of Hungary’s blockade, the EU is ready to activate the necessary mechanisms to support Ukraine economically without the participation of this country. Brussels is seriously concerned about the situation in Ukraine and understands the importance of providing economic support to this country invaded by Russia.
However, Hungary has maintained its veto on the €50 billion financial lifeline within a broader overhaul of the Union’s budget.
Hungary has pledged that Ukraine will receive funds as a matter of urgency and yes or yes. With the prospect of Hungary maintaining its veto at the EU leaders’ meeting, the international community is preparing to activate a plan B. This option would be an emergency solution, intended for this year only. In parallel, leaders are trying to get Hungary to accept minimal last-minute concessions to save the deal and move forward with plan A.
EU Plan B: an emergency solution
Proposed EU plan B seeks to ensure that Ukraine receives the necessary funds to prevent the country’s collapse. This alternative plan is based on the activation of different mechanisms, such as loans within the EU budget and bilateral contributions from the other 26 EU member states.
Although this option is not ideal, as it only requires the approval of a majority of the partners and not unanimity, as required for the financial lifeline within the multiannual budgetary framework.
To try to salvage an agreement on the original €50 billion plan, EU leaders have proposed an annual review of aid for Ukraine, but without veto power. This proposal is intended to satisfy Hungary’s demands and allow them to display their veto power at home. However, the guarantee that the deal will be reached is by no means guaranteed, according to EU sources.
Frustration of EU leaders and the consequences for Hungary.
EU leaders’ frustration towards Hungary is growing. Many see EU support for Ukraine as an existential issue and have lost patience with Hungary’s blockade. Some leaders even speak of possible consequences for Hungary due to its stubborn stance. The EU’s reputation is also at stake, as Russia takes advantage of the division among member states.
With the change of government in Poland, Hungary has lost the support it used to have from its ally. In addition, other countries such as Slovakia have not sided with it either. For the first time, the possibility of activating Article 7, which could deprive Hungary of its voting rights in the EU, has been raised. However, that point has not yet been reached, although the pressures on Hungary are growing.
Importance of the funds for Ukraine
The €50 billion funds that the EU is seeking to inject into Ukraine are vital to prevent the country’s collapse. Ukraine has resisted Russian aggression for almost two years, but faces serious economic difficulties and shortages of material and ammunition on the battlefronts. The EU is also trying to boost industrial capacity and redirect agreements with manufacturers to secure arms supplies to Ukraine.
Last year, the EU pledged to ship one million rounds of shells to Ukraine by March 2024, but has only delivered a third of what it promised. Against this backdrop, a new arms fund for Ukraine, endowed with €5 billion in its first year, has been mooted.
The capacity of companies in Europe to produce projectiles has increased by 40% since the start of the war, according to the EU’s High Representative for Foreign Policy and Security, Josep Borrell.
An important challenge faces the EU in providing economic support to Ukraine in the face of Russian aggression. In the face of Hungary’s blocking of financial assistance, the EU is prepared to activate a plan B to sustain Ukraine economically without Ukraine’s participation.
Although this option is an emergency solution, the EU is also trying to reach an agreement with Hungary to save the original €50 billion plan. The situation in Ukraine is critical and requires a quick and effective response from the international community.