EU budget dispute threatens EUR 50 billion war lifeline for Ukraine

The New Voice of Ukraine
·3 min read
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European officials note that budget negotiations are always difficult, but compromise is possible
European officials note that budget negotiations are always difficult, but compromise is possible

EU leaders risk leaving Ukraine empty-handed at a perilous moment in its war against Russia as a budget dispute threatens a EUR 50 billion ($53.4 billion) lifeline for Kyiv and Hungary vows to thwart its EU membership talks, UK newspaper the Financial Times has reported.

EU leaders could take a historic decision to bring Ukraine into the 27-nation club and seal a key budget deal at a summit on Dec. 14-15.

But efforts to reach a compromise are being hampered by the victory of Geert Wilders' far-right party in Dutch elections last month, and a recent decision by a German court to limit government borrowing.

"A budget deal will be 'very, very difficult,’" a senior official told the FT.

The disputes within the EU over aid to Ukraine jeopardize key promises made to Kyiv several months ago, when the flow of U.S. financial and military support to Ukraine was halted due to political disagreements in Congress.

Ukraine, according to the FT, has already warned that uncertainty over support packages from the United States and Europe threatens the country's "macro-financial stability." Therefore, the EUR 50 billion offered by the European Union should ensure Kyiv's solvency until 2027.

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However, EU funding for Ukraine has become a "political football" in the context of broader debates over EU budget priorities due to the Commission's decision to combine support for Kyiv in the proposal with other funding requests to replenish its budget for 2021-2027.

The EUR 50 billion for Ukraine, consisting of EUR 17 billion in grants and EUR 33 billion in loans, was combined with requests for EUR 15 billion for migration, EUR 10 billion for investment in "strategic technologies," and nearly EUR 19 billion for interest payments on the EU's common loans.

At the same time, European officials note that budget negotiations are always difficult, but a compromise is still possible. A revised package is expected to be proposed before the summit.

Read also: Ukraine counts on ‘powerful EU decision’ in December, Zelenskyy tells EU Council chief in Kyiv

"I think the doom and gloom around this issue is greatly exaggerated. We will not allow Ukraine to go through a sovereign default," said an EU official.

All the same, Hungary has threatened to block the disbursement of a planned EUR 50 billion aid package to Ukraine.

Hungarian PM Viktor Orbán regularly drives the EU to the edge, with European diplomats now in panic that his hostility to Ukraine is about to finally tip the bloc over the precipice, Politico wrote on Dec. 1, saying that this month’s summit will be a decisive test of how far Budapest will go to thwart EU support for Kyiv.

The European Union will be able work around any Hungarian veto and give Ukraine EUR 50 billion in aid, Reuters reported on Nov. 10, citing government officials. If Budapest does wield its veto, two EU officials said the bloc had a way to get around it by asking each of the other EU governments to set up their own aid package with Kyiv. In total, the bilateral pacts would come to the same amount.

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