Hungary  signals it may support EU aid package for Ukraine

After wielding its veto power at an EU summit in December to stop the proposed €50-billion fund for Ukraine, known as the Ukraine Facility, Hungary suspended a vital life-line for the war-torn country. As the EU searches for ways to revive negotiations on the package, Hungary signaled it may throw its support behind the initiative but with conditions.

As the EU faced an urgent need to support Ukraine, Hungary delivered a curveball during December's summit. Prime Minister Viktor Orbán exercised his veto power to halt the approval of the Ukraine Facility, which was intricately linked to a broader review of the EU's common budget. The move not only stalled financial aid to Ukraine but also disrupted Washington's efforts to secure approval for a new package of military assistance.
In an effort to rescue the financial aid package, the Belgian EU Council presidency has been granted a partial negotiating mandate, which allows them to initiate discussions with the European Parliament concerning the creation of two vital initiatives: the Ukraine Facility, a dedicated instrument aimed at supporting Ukraine's recovery, and the Strategic Technological European Platform (STEP).
The impasse on both sides of the Atlantic has left Ukraine in a precarious position, with Russia intensifying its airstrikes, exacerbating the humanitarian crisis. However, there is a glimmer of hope on the horizon, as EU leaders are poised to reconvene on February 1st, providing the Ukraine Facility with a second chance at approval.

Hungary's demands
As the make-or-break date approaches, Hungary has tabled intriguing proposals. One such idea involves dividing the fund into four annual envelopes, each worth €12.5 billion, according to four unnamed diplomats speaking to Euronews on condition of anonymity.
While this approach requires unanimous approval from EU leaders each year, it challenges the Facility's mission to provide stable, long-term assistance. Critics argue that this setup could empower Orbán or any head of government to block aid as early as next year, undermining the fund's effectiveness.
Hungary has also made unrelated demands concerning the EU's COVID-19 recovery funds. Specifically, Budapest is seeking a two-year extension to the current deadline, which would require reopening the legislation that established the recovery fund. This request stems from Hungary's inability to access its national plan due to rule-of-law concerns, potentially leaving the nation with a narrow window to utilize the funds, should they become accessible.
Prime Minister Orbán has vehemently decried the situation as "financial blackmail." His deputies have publicly insisted that the more than €20 billion in frozen cohesion funds must be fully unfrozen before any decision is made regarding the Ukraine Facility. This quid-pro-quo dynamic has intensified since the December summit, leading diplomats to describe it as "very transactional" and marked by overt trade-offs.
On both the Ukraine Facility and the two-year extension for recovery funds, Hungary finds itself isolated within the EU. Germany, in particular, has been critical of Hungary's demands, especially regarding the extension.

Hope on the horizon
Despite the impasse, Hungary's willingness to explore compromise options instead of rigidly adhering to its veto power suggests a more constructive atmosphere. In a recent social media post, Orbán appeared to embrace an alternative approach known as "Plan B." This option would manage financial support to Ukraine outside the EU budget, providing a potential workaround if EU member states fail to reach a breakthrough.
As the February meeting approaches, all eyes are on Hungary's demands and the outcome of this high-stakes battle over EU aid. The decisions made will undoubtedly shape the trajectory of EU relations and the allocation of critical recovery funds.