BRUSSELS ― Budapest has signaled to the EU that it is ready to lift its opposition to funding Ukraine ― as negotiations continue on sweeteners that would make it easier for Hungarian Prime Minister Viktor Orbán to climb down.
According to several European diplomats and officials, Orbán is edging closer to accepting a compromise to use money from the bloc’s budget, even though a deal is likely to fall short of demands he made in the aftermath of last month’s failed summit.
Orbán blocked a €50 billion four-year funding package to the war-torn country in December ― a move he was able to make because it needed unanimous support from the EU’s 27 governments ― prompting Europe’s leaders to consider breaking with the bloc’s hallowed principle of unity and finding a way to circumvent him.
But since then, both sides have pulled back from the brink and are now involved in a delicate dance over how to get the decision over the line when Orbán and other leaders meet in Brussels on February 1.
While there is still no agreement over what concessions to offer Hungary in return, and what it might accept, the EU is now confident that a deal can be done over the next couple of weeks, according to the diplomats and officials who spoke to POLITICO on condition of anonymity because of the sensitive nature of the talks.
Wake-up call
With Orbán entering his 18th year as prime minister, he has become the biggest thorn in the EU’s side, which Russia’s invasion of Ukraine has only served to highlight further. His support for President Vladimir Putin, who he considers a friend, comes on top of years of repeatedly breaking the EU’s democratic norms.
But there’s an emerging sense in Brussels that this time the EU may have called Orbán’s bluff.
“The December summit was a wake-up call,” one EU diplomat said. “Several leaders realized what [Orbán] is really about.”
One reason for this is the belief in Brussels circles that the Hungarian prime minister has run out of road when it comes to holding the EU hostage.
He has often tried to make support for EU causes conditional on the bloc unfreezing money withheld because of Hungary’s flouting of democratic principles. In December, the Commission unfroze €10.2 billion, after which Orbán approved the Commission opening accession talks with Ukraine ― a long process that could see the country one day become an EU member.
But the Commission has set the bar high for any further cash, signaling that Hungary has a long way to go before it can receive its share of funds from a pot of money designed to help countries recover from the economic shock of the pandemic.
Regular blackmailing
While there has been some willingness in Brussels to offer Orbán some concessions to achieve a deal, most national capitals have dismissed Hungary’s attempt to split the funding to Ukraine into yearly tranches that would need unanimous approval annually. In practical terms, this would give Orbán the power to block EU funding to Ukraine every year ― or squeeze concessions from Brussels for lifting his veto.
“It is very unlikely that member states will accept a solution that gives Hungary the chance of regular blackmailing,” a second EU diplomat said.
Another idea that has been doing the rounds to sweeten the pill for Orbán would involve a mid-term review on the funding, in 2025. But this option, which was floated by Hungary months ago, is also considered unacceptable among Kyiv’s strongest backers.
“It would create chaos if in 12 months we were to meet again and decide with unanimity whether Ukraine would get the funds extended,” a national government official said.
They pointed out that this runs counter to the logic of the EU’s seven-year budget which is meant to offer stability and predictability.
An EU official indicated that a potential compromise might involve the EU executive reimbursing Hungary for its interest rate repayments on post-pandemic cash.
Claiming victory
The Commission is also considering the introduction of an “emergency brake” that would allow any country objecting to Ukraine funding to delay payments and push back discussions at a summit of EU leaders. But this option would not allow a single member state to veto the payments.
The consensus is that any final compromise will have to include some concessions to Hungary ― enough to allow Orbán to claim victory at home.
“In December he said that no money from the EU budget would go to Ukraine,” the first EU diplomat added. “If this happens, how can he say that it’s a win?”
Two diplomats indicated that a second veto towards funding to Ukraine would prompt EU capitals to call for the so-called Article 7 procedure to suspend Hungary’s voting rights in the European Council.
Commission President Ursula von der Leyen and Orbán’s top advisers are still trying to hammer out a compromise, while Ukraine’s need for funding gets ever more desperate.
“Financial aid is necessary to go through the critical period of the war with a stable financial system and focus all possible internal resources on defence,” Ukraine’s finance ministry wrote in a statement. “Our financial capacity is much more limited than in Russia. So support is vital to equalize our chances.”
Barbara Moens and Jakob Hanke Vela contributed reporting.
