In a strategic move to secure Hungary's support for increased financial assistance to Ukraine and the initiation of membership talks for Kyiv, the European Union is contemplating the release of frozen funds worth billions of euros, sources within the EU have revealed.
The European Commission is currently preparing to unfreeze substantial EU funds allocated to Hungary, which have remained locked due to concerns over the rule of law. This development carries significant implications, potentially swaying Budapest's stance on raising the EU budget and delivering substantial aid to Ukraine. It also marks a pivotal moment for Prime Minister Viktor Orbán, who has staunchly opposed any EU budget increase until Hungary's access to the funds is restored.
Hungary has cultivated closer ties with Russia than most other EU member states, making it a key potential opponent in the upcoming decision, scheduled for December, regarding the commencement of accession talks with Kyiv. Such a decision requires unanimous approval from all 27 EU member states.
EU officials have indicated a strong link between the release of frozen funds to Hungary and other EU plans that demand unanimity, including discussions on enlargement and the budget. An estimated €13 billion is currently under discussion, according to sources, a figure first reported by the Financial Times. Nevertheless, reaching a deal is far from certain, and much will depend on Prime Minister Orbán's stance, particularly as Hungary faces domestic challenges like economic stagnation and a widening budget deficit.
The urgency for Hungary to access these funds could serve as an incentive for reforms, and the EU Commission hopes to leverage this necessity to encourage Hungary to lift its vetoes on various issues. However, the EU expects Budapest to initiate significant reforms in return for the release of the frozen funds.
Ukraine aid at stake
The freezing of funds destined to Hungary dates back to last December when the EU suspended €22 billion in cohesion funds. This action was taken after the EU determined that Hungary was not complying with rules protecting human rights and the rule of law. Cohesion funds are specifically designed to assist less developed EU member states in closing the investment gap and improving infrastructure.
Recent developments indicating progress in Hungary's efforts to regain access to these funds coincide with the EU's broader objective of securing unanimous support for an increased budget before the year's end. This is crucial to ensure continued financial aid for Ukraine, which faces ongoing challenges in resisting Russia's invasion and integrating with the Western world.
EU officials have cited Hungary's legislative actions taken earlier this summer, aimed at enhancing judicial independence, as a positive step toward unfreezing part of the €22 billion in economic development aid. Last week, the European Commission requested further details on the implementation of these reforms from Budapest.
A balancing act
The negotiations with Hungary place the EU in a delicate balancing act, as it strives to uphold democratic standards within its member states while offering critical support to Ukraine as it grapples with Russia's invasion and its aspirations for Western integration. For Ukraine, the Western world's backing is essential, and EU membership stands as a paramount national goal.
Before EU leaders cast their votes in December, the Commission will provide an assessment in the coming weeks regarding Ukraine's progress in meeting the conditions required to initiate talks. Prime Minister Orbán has emphasized that several "very difficult questions" must be addressed before Ukraine can embark on the lengthy path to EU membership.
In a recent address to the Hungarian parliament, Orbán underscored the connection between supporting Ukraine and unlocking EU funds, asserting, "Brussels… is expecting us to agree to an amendment to the European Union budget that requires unanimity. They are asking us… to give even more money to Ukraine." He emphasized that resolving the issue of funds owed to Hungary would significantly impact the budget's balance. The negotiations continue as the EU grapples with the intricate interplay of financial interests, geopolitical strategy, and democratic principles.
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