The battle to get £43bn in EU aid to Ukraine after Hungary’s Orban blocks it – and why it’s so important

With the US Congress also struggling to agree on sending fresh funds to Kyiv, this is a key moment

Ukrainian troops of the 21st Mechanised Brigade near the frontline in eastern Ukraine (AFP via Getty Images)

Hungary’s prime minister Viktor Orban has blocked a critical €50bn (£43bn) EU financial aid package for Ukraine, throwing into doubt Europe’s continuing support for Kyiv as it faces a tough winter battling Russia‘s forces.

A few hours previously, Ukraine’s president Volodymyr Zelensky had celebrated the EU finally agreeing to open up membership talks, a deal which was achieved after Mr Orban agreed to leave the room when the rest of the 26 nations voted. However, Mr Orban told Hungarian state TV on Friday that he could still block the years-long process of Kyiv’s admittance to the bloc further along the line if he believes it undermines Budapest’s interests.

“If we don’t want Ukraine to be a member of the European Union, then the Hungarian parliament votes it down. And until the issue gets to the parliaments, it’s a very, very long process, and as they counted and I did, there are about 75 occasions when the Hungarian government can stop this process,” Mr Orban said.

Mr Orban said he is “alone” on the issue of Ukraine, and that is true. While his threats over a future bloc on EU membership are likely aimed at his domestic audience, particularly with EU parliament elections next June, his blocking of funding is a real headache for Kyiv.

It is a particularly acute one given that the US is also still struggling to push through $61bn (£48bn) worth of funding of its own for Ukraine. The last thing Mr Zelensky needs is a slowing of support.

So what has led to this impasse, and what does it mean?

Orban's objections

Mr Oban has a habit of trying to use disagreements with other EU leaders for his electoral benefit, or to make him look strong to his nation's citizens. The Hungarian leader is an ally of Mr Putin, who is happy to do business with Russia even in the wake of the Kremlin’s invasion. His nation has also refused to send weapons to Ukraine.

Orban at the EU summit in Brussels on Thursday (AFP/Getty)

But the most immediate issue for Mr Orban is monetary in nature. On one hand, Mr Orban has said that Hungary contributes to EU funds and therefore that is the money of the Hungarian people going to Kyiv. In the wake of the two-day summit in Brussels, which ended on Friday afternoon, Mr Orban posted on social media: “EU summit on Ukraine. We did not allow that Hungarians’ money be given away!” On the other hand, the prime minister also wants funds that are due to Budapest. They had been blocked thanks to the increasingly authoritarian turn Hungary has taken, with the rest of the bloc unhappy at the eroding of democratic values and the rule of law.

The European Commission restored Hungary’s access to €10.2bn of frozen funds on Wednesday nominally after Budapest passed laws addressing some of the EU’s concerns, but more practically to try and stave off Mr Orban’s clear threats to veto funding and EU membership for Kyiv at the summit. More funds worth billions of Euros remain frozen.

The Hungarian prime minister said he had blocked the €50bn of Ukraine funding as “it is a great opportunity for Hungary to make it clear that it must get what it is entitled to. Not half of it, or one-fourth”.

How important is the funding?

Crucial. The money, spread out across 2024 to 2027 is aimed at keeping Kyiv afloat while it ploughs money into the war effort against Russia. It is due to be a mix of grants and loans, with some going to towards Ukraine’s defence.

The US and the EU have dovetailed on support for Ukraine, with the EU providing €133bn worth of total funding to €72bn from Washington. The US has taken the lead on direct military aid, at €44bn, more than double any other individual nation, with Germany next on the list with €17bn.

A Ukrainian serviceman on the eastern front (Reuters)

Without the EU funding, Kyiv will be forced to make tough choices about spending at a time when gains on the front line are at a premium and Russia is intensifying its missile strikes on Ukrainian cities.

Given that Republicans in the US Congress on holding up the $61bn in aid over domestic border issues, Kyiv fears that Moscow will try to take advantage of such dithering, or that it leads to a broader loss of support.

The tens of billions of dollars that the US has already provided in military aid has gone towards more than two million artillery rounds – Ukraine’s troops are using thousands of them a day on the front line – 60,000 rockets, 76 tanks, 35,000 grenade launchers and small arms and more than 400 million rounds of small arms ammunition and grenades.

When it comes to protecting skies over Ukraine’s cities from Russian missile and drone assaults, the US has also sent air defence systems, thousands of rockets and drones and a number of radar systems. All of it is crucial to keeping Russia at bay.

What happens now?

Given that 26 of the 27 EU nations are on the same page, leaders were lining up on Friday afternoon to say that they were sure a deal could be reached when they reconvene in January, with enough funds from previous agreements available to last another four to eight weeks.

European Commission President Ursula von der Leyen (AFP/Getty)

To try and reduce the poor optics of the delay, European Commission president Ursula von der Leyen said that another €1.5bn will be released in the coming days under those existing arrangements. European Council president Charles Michel said after the summit that he is “confident” the bloc will “be in a position to fulfil our promises to support Ukraine with financial means” in 2024.

However, Ms Von Der Leyen said that the bloc will be working in the meantime on “potential alternatives” to have an “operational solution in case that an agreement by 27 – so, unanimity – is not possible”.

Workarounds could include the creation of a trust with the 26 member countries not including Hungary, or try and deal out loans on a country-by-country basis. But doing so would be cumbersome – slower and more expensive – which does not fit with Ukraine’s dire need.

In the US, the White House has said that authorised funds will run out by the end of the month, although the Pentagon could eke that out by reducing the size of shipments and Joe Biden’s administration are looking at authorising all the funds they can without the need for Congressional approval.

Congress was due on its end-of-year break after today, but the Senate will meet again on Monday to try and work out a way to push through the funds being held up. “So much hangs on our success,” Chuck Schumer, the leading Democrat in the chamber, said. “We know the world is watching.”