Hungary blocks EU sanctions AND $106 billion loan for Ukraine, risking a domino collapse

Hungary vetoed the EU’s 20th sanctions package against Russia on 23 February and blocked a €90 billion ($106 billion) loan to Ukraine—breaking a December promise not to obstruct the aid—on the eve of the war’s fourth anniversary.

The consequences don’t stop at the loan. An IMF program worth $8.2 billion, currently under negotiation, is conditional on Kyiv receiving the EU loan. If the EU loan remains frozen, so is the IMF program. Ukraine faces a budget gap as early as April without those funds—the country spends all its own tax revenue on defense and depends entirely on foreign financing for pensions, hospitals, and schools.

“Without that support from the EU and the IMF, Ukraine’s economy would most likely collapse,” Maksym Samoiliuk, an economist at Kyiv’s Centre for Economic Strategy, told the Financial Times.

A promise made, a promise broken

In December 2025, EU leaders reached a unanimous agreement on the €90 billion loan. Hungary, Slovakia, and Czechia negotiated an exception: they wouldn’t pay into the lending scheme but pledged not to block it. The European Commission adopted legislative proposals on 14 January based on that deal.

Two months later, Budapest reversed course. Foreign Minister Péter Szijjártó declared both the loan and the 20th sanctions package—which targets Russia’s shadow fleet and energy revenues—frozen until Ukraine restores Russian oil transit through the Druzhba pipeline. Kyiv says the pipeline was damaged by Russian drone strikes on 27 January. Hungary blames Ukraine for not repairing it fast enough.

“It will be a big fight, everyone will demand our blood, but that’s how it is,” Szijjártó said in a video filmed on his flight to Brussels.

A coordinated squeeze

Hungary isn’t acting alone. Slovakia’s Prime Minister Robert Fico threatened on 21 February to cut emergency electricity supplies to Ukraine unless oil transit resumes—supplies that account for roughly 17% of Ukraine’s electricity imports, with Hungary providing around 45%.

Together, it’s an energy-and-finance squeeze on a country already enduring one of its worst winters under relentless Russian strikes on its power grid.

Ukraine’s Foreign Ministry was direct: “Ultimatums should be sent to the Kremlin, and certainly not to Kyiv.”

The election behind the veto

Poland’s Foreign Minister Radosław Sikorski told reporters in Brussels he believed Hungary’s veto was really about Orbán’s fight to stay in power. The Hungarian prime minister faces April elections with the opposition Tisza party leading Fidesz by 8 to 10 percentage points in polls.

Orbán has launched an aggressive anti-Ukraine campaign, accusing Kyiv of orchestrating a “Ukrainian oil blockade” to topple his government and install a “pro-Ukraine government aligned with Brussels.”

EU leaders had wanted both the sanctions and the loan finalized by 24 February—the anniversary of Russia’s full-scale invasion. Instead, EU foreign policy chief Kaja Kallas acknowledged on 23 February that neither would pass. France’s Jean-Noël Barrot said the sanctions would ultimately be adopted—“that is a certainty, but the question is when.”

For Ukraine’s budget, “when” is not an abstract question. The Centre for Economic Strategy and DiXi Group warned in December that Ukraine needed to start receiving EU tranches by the end of March 2026. That deadline is five weeks away.