Ukraine Faces Crucial Test at EU After US Leaves It Empty-Handed
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(Bloomberg) -- Hungarian Prime Minister Viktor Orban is set to dictate the outcome of a summit of European Union leaders — with the potential to turn it into a failure and highlight crumbling support for Ukraine.
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Orban’s push to block funding for Ukraine and obstruct the start of talks for the country to join the EU has frustrated partners in the bloc before the gathering in Brussels on Thursday and Friday. Orban’s opposition to a €50 billion ($54 billion) support package for Kyiv coincides with Congress stalling US President Joe Biden’s request for further military assistance.
Kyiv may be left empty-handed after the summit, which would be even more dispiriting for Kyiv with US lawmakers leaving for their holiday break on Dec. 15. Such a scenario would mark a turning point in Western support for Ukraine with newly committed military assistance already at its lowest level since the invasion began. It may also embolden Russian President Vladimir Putin, who has been betting that Kyiv’s allies would eventually grow fatigued.
There are plenty of other issues on the summit agenda on which leaders are divided. Here are the main topics to watch:
Ukraine Aid
The aid package of grants and loans for Ukraine aims to cover part of its budgetary needs and help with the reconstruction between 2024 and 2027. Orban is the only obstacle to approval which requires unanimity, officials said, with other member states willing to contribute with new funds.
Hungary is ready for a financial compromise on Ukraine aid but will torpedo efforts to start EU membership talks with Kyiv, the premier said Wednesday. Balazs Orban, his chief political adviser, told Bloomberg on Tuesday that Hungary is prepared to lift its veto in return for billions in financing the bloc has been withholding from Budapest over democratic backsliding.
The bloc has been working on a plan B to facilitate funding for Ukraine. The country relies on foreign aid to finance civil servants’ salaries, hospitals and education. Failing to receive EU funding threatens Ukraine’s economic stability as the country faces the second winter of Russia’s invasion, after its counteroffensive stalled without yielding many gains. Leaders could however agree on a path toward resolving the issue early next year.
Ukraine Membership
When the European Commission, the EU’s executive, recommended formally opening membership talks in November, approval from member states seemed like a foregone conclusion. But Orban wanted the issue removed from the leaders’ agenda, arguing Ukraine doesn’t yet meet the conditions to open talks. Orban wants the EU to discuss its Ukraine strategy first and in the meantime offer Kyiv a strategic partnership.
Rejecting or delaying the start of the process would be a blow to Kyiv’s morale. Ukrainians have been seeking to forge ties with the EU for almost two decades. It also risks damaging the EU’s reputation in the country. Steering the war-torn country toward EU membership is one of the bloc’s core commitments to Kyiv, along with providing economic aid and funding weapons supplies.
EU Budget
The Ukraine aid package is part of a review of the EU’s long-term budget for 2021-2027. The Covid-19 pandemic, Russia’s invasion of Ukraine and the energy crunch have depleted resources for any future challenges. The commission has requested €66 billion of fresh money, mostly for the Ukraine facility.
The commission is also seeking funds for migration (€15 billion), a new technology fund (€10 billion) and to cover around €19 billion in interest payments. Member states remain split on priorities and what funds should be redeployed. Although the figures have been revised downward, agreement continues to be very difficult as the commission, backed by several member states, insists on approving Ukraine aid and the rest of the long-term budget as a single package.
The economic backdrop doesn’t make the situation any easier for European leaders. The 20-member euro area is probably in its first recession since the pandemic and the European Central Bank is likely to cut its already paltry growth forecasts for 2023 and 2024 when it announces its final interest-rate decision of the year later Thursday.
Russian Sanctions
EU nations are nearing an agreement on a 12th sanctions package. It includes a ban on diamonds, trade restrictions on machines used to make weapons and new curbs to crack down on Moscow’s ability to get around existing measures and the price cap on Russian oil.
Still, several member states have pushed to water down some of the proposals and not for the first time the package is weaker than when the commission first proposed it. Should an agreement not be reached in time for the leaders’ summit, adoption could slip to next week.
Israel-Hamas
In what could be another contentious discussion, the leaders are also set to touch on the Israel-Hamas war. Since Hamas’ attack on Oct. 7 and Israel’s retaliation, the bloc has struggled to agree to a united position on how to view the war, with countries like Germany reticent to criticize Israel.
At a previous summit, it took hours for leaders to agree to call for humanitarian pauses in the conflict. Now Spain, Belgium, Ireland and Malta are urging the bloc to push for a “lasting humanitarian cease-fire.” The EU is considering punitive measures against Hamas leaders and Israeli settlers in response to violence, with the proposals likely to be discussed at the summit.
Migration
No major progress is expected on migration given the summit’s heavy agenda and divisions among member states. The commission’s President Ursula von der Leyen however sent a letter to EU leaders Wednesday summarizing the state of play on the four key strands: strengthening external borders, combating migrant smuggling, stepping up returns and building comprehensive partnerships.
Negotiations between member states and the European Parliament are in a final stretch to conclude a long-awaited pact on migration and asylum. The commission and some diplomats believe that an agreement is possible by the end of the year, setting EU policy on the handling of migrants and refugees, their integration and border management in the years to come.
--With assistance from Zoe Schneeweiss, Daryna Krasnolutska, Piotr Skolimowski, Michael Nienaber, Ania Nussbaum, Stephanie Bodoni, Lyubov Pronina, Natalia Ojewska, Ewa Krukowska, Katharina Rosskopf and Slav Okov.
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