The European Union summit, held on December 14-15, became historic for Ukraine, providing an opportunity to start negotiations on joining the EU. However, the joyful atmosphere is darkened by Viktor Orban's new veto. After Ukraine's diplomatic victory, Hungary promised a financial package that included aid to Ukraine in the amount of 50 billion euros.
The Hungarian leader, yielding to the pressure of his colleagues, agreed to a positive decision for Ukraine, but refused to support the financial package. This raised the question of whether this summit can be considered a victory for Ukraine, and how serious Orbán's veto of the financial package is. Many people are concerned because it involves external funding, which is key to Ukraine's wartime budget. However, despite this, the temporary blockade of Hungary is considered an unfavorable circumstance, and there is money for Ukraine. The EU is considering different options for providing financial aid to Kyiv, and the financial package is due to be approved on February 1, and this time it is planned to override Orbán's veto, should it arise again.
Funding from the EU
External funding, a vital resource for Ukraine during the war, has come into question due to political turmoil in the US, halting the flow of funds. Until now, the main donors were the European Union and the United States. However, from the beginning of 2024, there may be a financial wasteland, since the money from the EU is running out, and the new program, Ukraine Facility, has not yet received final approval.
This program, estimated at 50 billion euros, is not only extremely large in its scope, but also provides long-term financing for four years. What is important is that it can provide Ukraine with financial stability without the need to constantly draw out new tranches, overcoming the resistance of individual EU member states, in particular, Hungary.
Although the final approval of the program will take place at an extraordinary summit on February 1, there is already a preliminary agreement on the amount of funding, and Ukraine will receive these funds, even if the only opposing vote in the event of a Hungarian veto. However, the question remains as to whether it will be possible to convince Hungary to support the program, but its leader Viktor Orban outlined an opportunity to "find out".
Negotiations from the middle
Illuminating the backstage of the recent Eurosummit, where the issue of Ukraine and a significant financial package was discussed, it is worth turning to the statements of European politicians who participated in these negotiations.
One of the key participants, Viktor Orbán, revealed numerous details of the discussions during an interview on the radio station he controls, Koshut. This interview was entirely devoted to the EU-Ukraine summit, and it contained a lot of details, in particular, regarding the discussed sum of 50 billion euros.
An important aspect is the absence of a technical Hungarian veto. The decision on the Ukraine Facility was not subject to a vote, as it was known that Orbán would express his disapproval. During the discussion, it was immediately noted that he would not support this decision. Attempts to convince him lasted for hours and ended in failure.
If at the previous meeting Orbán left the room, allowing other leaders to decide on EU enlargement, this time he did not do so. He argued that the accession process of Ukraine currently does not pose a threat to Hungary, and that the distribution of funds means spending Hungarian money.
The important point is that Orbán wanted to return home with some sort of victory. He promised his voters that he would not start negotiations with Ukraine and even held an emergency session of the parliament, cementing his refusal. Finding himself in difficult circumstances, he could not return without a single victory that he could "sell" to his voters as a manifestation of his strength. Thus, he refused to vote for the decision on 50 billion euros.
How will the money be transferred to Ukraine without the consent of Hungary
Viktor Orban's expected refusal did not impress anyone. However, there are certain moments that count, especially after Hungary was promised a financial reward for this rejection vote (this is not an exaggeration, more on this below).
However, the refusal of the head of the Hungarian government was taken into account in the plans. According to "EvroPravda", after Orban's firm "no", other countries considered the option of "joint financing from 26 countries". The idea was to create a separate fund to which all EU member states would contribute. However, this proposal did not receive enough support.
There are several arguments against this simplistic approach.
First, it would allow Orbán to look like an unequivocal winner. He could brag to his voters, emphasizing that he is the only one who saves budget money for his people, while other countries spend it on Ukraine. Some politicians could perceive this as support for populists or Putin supporters with similar demands.
Secondly, this way would require considerable time, since in many countries the budgets have already been approved by the parliaments. Making changes to budgets is a process that can sometimes cause a blockade due to populists or supporters of Putin.
Despite this, there is an agreement in principle to provide assistance to Ukraine, although the choice of financing method remains open.
This is probably the biggest news in the financial aspect of the summit.
So, all 26 EU member states, with the exception of Hungary, not only generally agreed on the need to help Ukraine, but also agreed in detail that they would provide Ukraine with 50 billion euros, in proportion to their contribution to the EU budget. At most, they agreed that it would happen regardless of Orbán's consent.
It is also worth noting that the leaders of the member states instructed the European Commission to develop a solution that would bypass the Hungarian veto so that it would not lead to the strengthening of an authoritarian leader. This was announced officially and publicly, although usually such assignments remain confidential. "It is necessary to have a working plan if a unanimous agreement is not possible at the summit on February 1," said European Commission President Ursula von der Leyen in Brussels after the summit ended.
The Ministry of Foreign Affairs of Ukraine also officially announced that the EU's decision to allocate 50 billion euros to Ukraine was accepted in principle. At the same time, in informal conversations, representatives of the authorities confirm that discussions on the possibility of financing have been completed. The discussion is now focused on how exactly this decision will be formalized by the EU.
The dialogue with the Hungarian Prime Minister on this issue is also ongoing.
Arrangements
As already mentioned, the delay in European funding, which was supposed to start in January to ensure Ukraine's macro-financial stability, will obviously not become critical.
Is it important for Kyiv to delay the decision until the February summit? The unequivocal answer is no. The government currently has enough reserves in the budget.
"We have already received 0.9 billion dollars from the IMF, and the last tranche of macro-financial assistance from the EU, 1.5 billion euros, should arrive in the near future. In addition, funding from Japan is expected. If Ukraine receives this funding in full, the government will enter the next year with a liquidity reserve of approximately $5 billion. This will be enough so that the delay of the first tranche of the Ukraine Facility for 1-1.5 months does not become critical. If necessary, the government will be able to delay part of the expenses or temporarily use the funds of local budgets that have accumulated in treasury accounts during the years of surplus", - explains the senior economist of the Center for Economic Strategy Yuriy Gaidai.
The main thing now is the certainty that a decision will be made in the near future. And such confidence exists.
It seems that the EU believes that the most likely scenario at the new summit will be that Orbán can express his indignation, liven up the situation a little, but still give the "green light" to the financing of Ukraine according to the standard procedure.
This is a profitable option for Ukraine, as it will allow to receive funds as soon as possible - and this is an urgent need.
It is also important to note that this would be the most beneficial option for the EU, as it would avoid creating an unnecessary precedent of circumventing existing procedures, which is not always accepted in Brussels.
In addition, it could be beneficial for Hungary as well, as avoiding the second round of its veto would help avoid tensions. Since the European Commission was tasked with developing a legal mechanism to circumvent a possible veto at the summit on February 1, it can be argued that all parties will be ready for such a step legally.
