It is too early to celebrate the dismantling of Hungary’s blockade of the EU accession negotiations with Ukraine after he dropped the veto threat at the December summit – the next two months will show whether the glass is almost full, or almost empty.
The December 14-15 European Council meeting achieved a notable success with EU Member States sidelining Hungary’s blockade to Ukraine’s EU ambitions and opening the door to the accession negotiations with Kyiv.
A surprise with a sting
Yet, the summit failed to secure a €50 billion funding line to the heavily embattled country. At the same time, the European Commission decided to release €10 billion of previously suspended cohesion funds for Hungary, raising suspicion about a potential package deal. As noteworthy as the political outcome regarding Ukraine appears to be, it is at least as surprising – and the optics are certainly not in favour of the Commission either.
Both this paper’s author and a critical mass of analysts expected Hungarian prime minister Viktor Orbán to dig in with his veto to the Ukrainian accession file while being ready to compromise on the financial aid Kyiv desperately needs to keep its liquidity and ability to finance its war of self-defense against the Russian invasion.
Two facts supported that foresight. First, that providing financial aid to Ukraine was a question of strategic importance in the short run, while accession negotiations—however highly valued by the Ukrainian side and strategic in the long run—constitute rather a symbolic issue with limited immediate effect beyond signalling political support to Kyiv.
Second, while the Hungarian government’s objection to financing Ukraine can be circumvented through the creation of a special purpose financial vehicle on an intergovernmental basis, there is no way around a Member State’s veto on the enlargement of the Union according to the Treaties.
Consequently, Orbán could have maintained and exploited his veto on Ukraine’s EU accession negotiations in a largely symbolic manner for an indefinite time while ultimately making concessions and showing flexibility regarding more tangible and immediate EU support to Kyiv using it as a bargaining chip.
However, seemingly exactly the opposite happened. Orbán leaving the room of the EUCO meeting de facto allowed the affirmative vote on the enlargement file, but he insisted on the refusal of the EU financial aid.
Pressure from Orban remains
In light of the symbolic victory — forcing Orbán to abandon his broadly-publicised opposition to starting accession talks — EU leaders appeared to be largely enthusiastic, however, the Hungarian move actually increased the pressure on the EU rather than relieve it.
While French President Emmanuel Macron emphasized that the EU already disposes about the tools that enable the circumvention of the Hungarian roadblock, he missed a key variable: time.
Even though the International Monetary Fund (IMF) approved a new $900 million loan to Ukraine just days before the EUCO meeting, this may provide only a little leeway for Kyiv and the EU. It’s not an accident that IMF head Kristalina Georgieva urged the EU and the U.S. to provide the promised tens of billions in funding aid with the argument that “Kyiv can [only] manage a likely short-term funding gap of a couple of months”.
Previous analysis forecasted that Kyiv may reach a budget cliff around March 2024, a deadline that might be slightly extended by the recent IMF tranche. Aside from Ukraine’s ability to keep its state and economy running over that period, the main question now is whether the EU is able to put together an intergovernmental funding vehicle in just two months. One-sided optimism here might be ill-founded.
While the 26 Member States demonstrated a solid and unified front against Hungary, setting up the aid package outside of EU frames not only makes formalities more complicated, but also opens up the opportunity for less committed Member States to freeride.
Some now might be tempted to jump ship or trigger new discussions about their level of participation. Furthermore, participation in the intergovernmental vehicle will likely be more prone to domestic debate and pressure, especially from the far right.
Herding the 26 cats under these circumstances might be more difficult and time-consuming. Whether countries like Slovakia and The Netherlands will remain on board is questionable.
Still, if the 26 Member States can muster the agreement by the end of February, they can claim a late victory at the EUCO. In this case, the glass will be almost full. With the financial aid delivered and accession negotiations started, the Hungarian blockade of these two crucial files will appear to be effectively neutralised.
However, if Member States fail—and time is playing against them—the glass will almost be empty. In a desperate financial state, Ukraine will hardly be in a situation to exploit the potential political resources provided by the accession talks. In that case, one will witness that Orbán ultimately delivered a heavier blow to Kyiv than any European head of state and governments expected—or admitted—on that optimistic December night after the EUCO.
The motivation remains
Why did Orbán ultimately opt for the blockade of the Ukraine aid instead of the accession talks? Why did he withdraw from the symbolic battlefield where he previously entrenched his positions? To answer this question, one should ask what the Russian strategic interest may have been. What would President Vladimir Putin have asked of Orbán: to block Ukraine’s EU accession or to block the EU financial aid to Kyiv? Against the background of war rationale, in the current context, the answer is obvious: financial aid.
And, the Hungarian government indeed appears to comply with that strategic interest of the Kremlin, both inside and outside the European Union. The blockade of the EU’s financial aid and the reported Hungarian lobby attempts to entrench anti-Ukrainian positions in the GOP and the US Congress indicate that Prime Minister Orbán is consistent in his approach and continues to harm Ukraine’s strategic interests.
Furthermore, while the accession negotiations with Ukraine now received a green light, the road ahead for the country’s membership in the European Union is still long and winding.
A host of criteria to meet, and chapters to open and close lie ahead of Kyiv, ultimately with the need for a final unanimous decision of all EU member states to conclude the process and welcome Ukraine to the club. Ukraine now jumped but the first hurdle; if the accession process itself was not already challenging enough, Kyiv must remain painfully aware that Orbán will try to trip it along every step.
The double whammy
In light of these developments, the claim that there must have been a deal between the EU and Budapest to buy Orbán’s constructive behaviour on the launch of accession talks through the simultaneous release of previously suspended cohesion funds does not appear to be entirely convincing, despite the bad optics created by the sequence of the events.
Even if there was a bargain, would European leaders have really been so confident in their ability to quickly muster an intergovernmental aid package that they traded the opening of the accession talks for the now released €10 billion to Hungary, instead of securing the essential and urgently needed financial aid for Ukraine? Hard to believe.
What likely happened on the cohesion funds front is simpler, even though still distressing. Yet again, the European Commission was satisfied with partial compliance. As a matter of fact, the Hungarian government fulfilled—at least on paper—three out of the four judicial independence-related milestones with the respective law passed in May and delivered—again on paper—on the fourth just ahead of the EUCO.
Even though full compliance was not achieved—and it was certainly not the goal of Budapest either—under these circumstances, it was increasingly difficult for the Commission to keep that funding suspended. It may indeed have sought to avoid Hungary challenging its decision at the Court of Justice of the European Union (CJEU), as the argument went.
Ultimately, however, the timing of the Commission’s decision on the release or suspension was orchestrated by the Hungarian government itself by submitting the outstanding replies to the last open questions of the Commission by playing with the deadlines of the procedure, forcing the latter to draw its conclusions at a politically sensitive time.
The bottom line seems to be that the Guardian of the Treaties, as often, made a rather technocratic decision based on a very formal and narrow interpretation of the rule of law, avoiding any broader politicisation of the question or looking at the actual context on the ground.
The balance will show soon
Did the European Commission make the right decision to release the funds and not give Budapest the opportunity to appeal to the CJEU with a chance of success? From the institutional perspective of the Commission, it did.
Does the release of the funds strengthen Orbán’s position both domestically and in its poker game with the EU institutions? Certainly.
But was this really a package deal linking Ukraine’s accession dossier with Hungary’s rule of law compliance? Highly unlikely.
Even against the backdrop of the release of this €10 billion in cohesion funds, Hungary’s obstruction on Ukraine was visibly not diffused. What is more, such a deal would not have even had the potential to alter Budapest’s blackmail potential regarding short- and long-term support for Ukraine financially and regarding the country’s EU aspirations. Against both timelines, Hungary retained its ability to derail substantial EU action.
Thus, the battle with the Hungarian government over financial and political support for Ukraine is far from over in the EU. The EU 26 must demonstrate that they are up to the task to circumvent a Hungarian blockade and put together an intergovernmental financial vehicle within two to three months.
If they succeed, that will certainly bring new dynamics into the EU relationship with Hungary. If they don’t, the EU’s pro-Kremlin autocrat just dealt a heavy blow to the Ukrainian people.
This text is co-funded by the European Union. Foresight on European values and democratic security is carried out as part of a 4-year framework partnership to support European networks, civil society organisations active at the EU level and European think tanks in the areas of Union values (CERV).
To read more about EU values foresight, click here and download our report.
Daniel Hegedüs, senior fellow, The German Marshall Fund of the United States
Zsuzsanna Végh, visiting fellow, The German Marshall Fund of the United States
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