Europe is braced for a showdown over money for Ukraine

Leaders of the 27 member states of the European Union will meet in Brussels on Thursday and try to unlock €50 billion of funding for Ukraine that was blocked by Hungary in December, in a crucial summit at a pivotal moment in the war.

Failure to reach an agreement would mark a major blow to Ukraine, at a time when outmanned and outgunned Ukrainian forces are struggling on the battlefield in the face of a renewed Russian assault, and military aid from the United States has dried up amid an ongoing battle in Washington over future funding for Kyiv.

Hungarian Prime Minister Viktor Orban says he doesn’t oppose European funding for Ukraine, but is insisting that the money should not come out of the EU’s budget. On Tuesday, Orban said he also thought the figure of €50 billion was too high, and repeated his demand that any deal for funding be reviewed every year. The 26 other EU leaders are opposed to those demands.

If Orban continues to block the €50bn, it is possible that the other 26 member states will seek an alternative arrangement outside of the EU’s structures.

There are other suggestions that the EU could generate revenue for Ukraine from frozen Russian assets within the block.

Ahead of the summit, Hungary accused Brussels of blackmail after a report in the Financial Times said that EU officials were drawing up proposals on how to hit the Hungarian economy as punishment for blocking the funding plans. Hungarian officials also say that they have sent proposals to Brussels regarding money for Ukraine.

“Brussels is using blackmail against Hungary like there’s no tomorrow, despite the fact that we have proposed a compromise,” Balázs Orbán, political director to the Hungarian prime minister wrote on X Monday, along with a picture of the FT story.

He had specifically highlighted a passage of the article that said: “Brussels has outlined a strategy to explicitly target Hungary’s economic weaknesses, imperil its currency and drive a collapse in investor confidence in a bid to hurt ‘jobs and growth’ if Budapest refuses to lift its veto against the aid to Kyiv.”

The FT report claimed that a document it has seen described how failure to reach an agreement on the package for Ukraine would likely lead to EU funds being withheld from Hungary, which “could quickly trigger a further increase of the cost of funding of the public deficit and a drop in the currency”.

A senior EU official told CNN that the document cited in the FT article “does not outline any specific plan relating to the MFF (EU budget) and Ukraine Facility, nor does it outline any plan relating to Hungary.”