The European Union is preparing a backup plan to provide Ukraine with €20 billion to bypass Hungarian Prime Minister Viktor Orbánʼs veto.
The Financial Times (FT) writes about it.
The scheme provides that the member states of the European Union will provide guarantees to the EU budget. This will allow the European Commission to borrow up to €20 billion on the capital markets for Kyiv in 2024. Specific terms are still being discussed, and the final amount will be determined according to the needs of Ukraine. Such a plan will be implemented if Viktor Orbánʼs veto cannot be overcome at a summit scheduled for February 1.
This is similar to the mechanism already used in 2020 when the European Commission provided up to €100 billion in funding for EU countries during the COVID-19 pandemic. This option would not require guarantees from all 27 EU member states, if the main participants include countries with the highest credit ratings. Therefore, such a plan will allow the EU to bypass Hungaryʼs veto, since the allocation of aid to Ukraine will not require the unanimous support of all EU member states.
Some countries, notably Germany and the Netherlands, may require parliamentary approval to provide national guarantees. They plan to complete this process in time to provide aid to Ukraine by March.
One of the disadvantages of this scheme is that it will be limited to loans and will not include grants. Member countries can still choose to provide grants on a bilateral basis.
Another backup plan involves the continuation of the funding structure used this year — the EU has provided Ukraine with €18 billion in loans for a period of several months to a year. An overwhelming majority of countries is required to agree to this option. But officials stress that their best option is to approve an unchanged aid package blocked by Hungary.
- Earlier, the European Commission excluded Hungary from the economic stimulus program to overcome the consequences of the coronavirus pandemic due to signs of corruption and the Orbán governmentʼs departure from the principles of the rule of law. In response, Hungary effectively vetoed the EUʼs decision to provide Ukraine with €50 billion in economic aid until 2027.
- Viktor Orban claimed that Ukraine should not receive large sums from the budget of the European Union, since it is not part of the bloc. At the same time, other leaders assured that they would be able to help Ukraine without Hungaryʼs consent, but then the money would not come from the EU budget.