EU leaders to press Hungary on Ukraine funding deal

As Russian attacks continue, Ukraine is running out of funds to keep its economy afloat and deliver key services such as running hospitals or keeping schools open to teach children. The last round of European Union (EU) financial aid for Kyiv was disbursed in December, and there is no guaranteed EU funding on the horizon. A plan to secure €50 billion ($54.1 billion) to tide Ukraine over until 2027 through EU budget support remains deadlocked after Hungary vetoed the agreement in December.

EU leaders will gather in Brussels to try and hash out a deal on Thursday. "The level of nervousness is quite high," a senior EU official said ahead of the meeting, noting there was mounting "frustration" toward Hungary from many of the bloc's 26 other member states.

What are Hungary's objections?

Hungarian Prime Minister Viktor Orban has rarely shied away from being cast as an EU outlier. While the bloc has consistently condemned and sanctioned Russia for its full-scale invasion of Ukraine, Orban drew criticism from some EU counterparts when he was pictured shaking hands with Russian President Vladimir Putinin October.

The Hungarian leader has delayed agreements on EU sanctions against Moscow as well as deals to support Ukraine on several occasions. He has also called for Kyiv to lay down arms and accept a cease-fire. 

While other EU leaders have stressed the need to shore up Ukraine's financial security to send a message to Russia that the bloc will stay the course with Kyiv, Orban has publicly opposed long-term funding.

"We do not know what's going to happen in Ukraine in the next three or four months," he told the French weekly news magazine Le Point on Tuesday. 

"Their proposition goes in the direction of a military solution — something I do not subscribe to. Hungarians don't like that either," he added.

How will EU leaders convince Orban?

In a bid to secure an agreement, EU leaders are likely to offer Hungary an annual debate to review the implementation of the funding model for Kyiv.

While Orban has signaled some openness to striking a deal, he told Le Point that he wanted a regular opportunity to veto funding. "It has to be unanimous," he said.

That's likely to be a red line for other EU member states.

"I think it's clear that we are not willing to introduce new vetoes," one EU diplomat said ahead of talks. That means the debate in the room could come down to details over what such an annual review might comprise.

EU officials have reportedly been exploring other methods to put pressure on Budapest. Earlier this week, the London-based daily Financial Times published an article quoting a leaked EU document the newspaper said "outlined a strategy to explicitly target Hungary's economic weaknesses, imperil its currency and drive a collapse in investor confidence."

Asked about the reports, a senior EU official said this was merely a "background document" describing the Hungarian economy. "We have no plans whatsoever of putting pressure in one way or the other."

Plan B: Aid for Ukraine from remaining bloc members

Should EU leaders fail to convince Orban, they have designed a back-up plan: Banding together as 26 countries and offering support for Ukraine outside the bloc's official structures.

"We have to get money to Kyiv to help the Ukrainians. I think this is absolutely clear to 26 leaders, and I have no doubt that whatever the outcome is tomorrow (...) that their main focus in any case will be to get that money to Ukraine in time," an EU diplomat said on the matter.

But the optics of this disunited plan B make it a less-than-desirable option in Brussels.  Given the ongoing debate among US lawmakers over their future financing for Ukraine , the EU is at pains to show Washington its willingness to step up and offer long-term support to Ukraine.

EU 'doomed to unanimity'

Over Orban's last decade in office, the European Commission and European Parliament lawmakers have accused Hungary of democratic backsliding, violating migrant rights, suppressing academic freedom and trying to silence the LGBTQ+ community — all allegations Budapest denies. Though some €10 billion in EU funds were released last month after the European Commission rubber-stamped judicial reforms in the central European state, the bloc continues to withhold billions from Hungary over these alleged breaches.

On Tuesday, Orban told Le Point the Commission was "waging an ideological war against Hungary."

Even if leaders do strike a deal with Hungary on Thursday, it would not herald happier times for EU unity.

"We are doomed to unanimity," one EU official said before the meeting.

"It is something which is weakening the EU in the eyes of adversaries, but also in the eyes of its own citizens, so it's something which needs to be taken care of," Janis Emmanouilidis, director of studies at the Brussels-based think tank European Policy Center, told DW.

The bloc's rules dictate unanimous backing for big-ticket decisions such as sanctions, integrating new members or changing the bloc's budget. That means Hungary will be able to continue exercising veto rights in the future.

Any change to these rules would also require unanimous backing.

Could Hungary be stripped of EU voting rights?

There are now murmurings around Brussels of pursuing the so-called "nuclear option" of progressing the lengthy and cumbersome procedure of stripping Budapest of its EU voting rights.

Hungarian lawmaker from the ruling right-wing populist Fidesz party Balazs Hidveghi slammed the idea as "shameful."

"You disagree with someone, and then you want to take away their right to speak and vote? That is a dictatorship," he told fellow parliamentarians in Strasbourg earlier this month.

The procedure — known as Article 7 of the EU treaty — is unlikely to move forward any time soon due to political and legal constraints, but Emmanouilidis told DW it has now become "a potential reality."

 Asked about the possibility on Wednesday, one EU diplomat said: "The focus is on getting a deal at 27 [EU members — ed.], trying to convince Viktor Orban tomorrow that it's also in his national interest to make sure that we get this done for Ukraine." 

Teri Schultz contributed to this article.

Edited by: Maren Sass