FT: EU crafts €20 bn plan B for Ukraine aid to bypass Hungary veto

The EU is working on a 20 billion euro backup aid package for Ukraine using a debt structure that avoids needing Hungary’s approval, after a proposed 50 billion euro four-year package was vetoed by Hungary, as per FT sources.

byYuri Zoria

27/12/2023

2 minute read

Ukraine, EU flags on Kyiv’s central street Khreshchatyk. Credit: giz.de

FT: EU crafts €20 bn plan B for Ukraine aid to bypass Hungary veto

The EU is devising a €20bn back-up plan for Ukraine, bypassing concerns from Hungary's Viktor Orbán, Financial Times reports citing its sources.

EU leaders couldn't agree on a €50bn package for Ukraine due to Orbán's veto, prompting the search for alternatives to avert a potential budget crisis in Kyiv.

Orbán vetoes EU’s €50 bn Ukraine aid after EU open door to Ukraine’s membership

"Officials involved in talks said one model funded by debt has gained traction as the most practical way to provide support if Orbán refuses to drop his veto at a planned summit on February 1," Financial TImes wrote.

EU member states would provide guarantees to the EU budget, enabling the European Commission to borrow up to €20bn for Ukraine next year. Terms are still under discussion, with the final amount based on Ukraine's needs, according to unnamed officials cited by FT.

This option wouldn't require guarantees from all 27 EU member states, allowing to bypass Hungary's veto. Some nations, such as Germany and the Netherlands, may need parliamentary approval for their guarantees.

This scheme excludes grants, unlike the initial EU budget proposal, focusing solely on loans. Member states retain the option to provide grants bilaterally.

One backup option is extending the current funding structure with low-interest loans for up to a year, requiring a majority vote. Yet, officials prefer gaining approval for the original aid package proposed in June, initially blocked by Hungary.