Belgium (Brussels Morning Newspaper) Hungarian Finance Minister Mihaly Varga opposed on behalf of his government an EU proposal to provide a loan for Ukraine financed by a joint member state borrowing scheme.
After expressing the Hungarian government’s opposition to the Ukrainian aid plan, the finance ministers of the other 26 member states delayed reaching a decision on releasing EU aid financing to Budapest.
The EU aid plan for Ukraine envisioned setting aside 18 billion euros in loans, promising Kyiv regular and predictable disbursements, which would help the Ukrainian authorities to plan ahead with their finances.
While 26 member states expressed support for the plan, Hungary objected, seeking to pressure Brussels into approving its Resilience and Recovery Plan (RRP), a necessary requirement for Budapest to be able to tap into 5.8 billion euros of EU’s post-pandemic recovery funds. The deadline for approval of the plan is 31 December, and 70% of the amount will become unavailable to Hungary unless the EU approves its RRP.
Budapest is reportedly also attempting to pressure other EU states into freezing a smaller amount of other EU funds than the European Commission recommended last week. The EC, dissatisfied with the rule of law, high-level corruption, and judicial independence in Hungary, proposed to freeze up to 7.5 billion euros – 65% of regular EU funding slated for Hungary – until Budapest makes significant progress in amending these problems.
The Hungarian government, on the other hand, is claiming it is blocking Ukraine’s aid on principle and argues it does not wish to encourage the practice of pressuring countries into changing their positions by blackmailing them by denying them access to EU funds.
“Hungary considers it a dangerous precedent that the payment of EU funds to Hungary is linked to other, completely unrelated issues,” said Hungarian government spokesman Zoltan Kovacs, claiming that the country has met all obligations necessary to receive money from Brussels. “We refuse to make EU funds conditional on changing our position,” he added.
After Varga made it clear that Hungary would veto the Ukrainian aid plan, the remaining ministers attending the Council meeting opted to take off from the agenda any decision regarding the 7.5 billion in funds, and also delayed the decision on Budapest’s RRP. The 13.3 billion currently held up by the EU would amount to nearly 9% of Hungary’s GDP in 2022.
Hungarian Prime Minister Viktor Orbán has clashed heavily with Brussels in the past over a range of issues, from minority rights, women’s rights, and treatment of migrants to rule of law and corruption concerns. Faced with the prospect of losing out on a significant portion of available EU funds, Hungary formed a new Anti-Corruption Task Force, set to meet on 13 December for the first time.
Hungary claims that it has implemented all measures required by the EU, but the European Commission remains reserved on whether any of the measures passed by the Hungarian Parliament will prove effective in practice, or whether they will just set up Pro-forma bodies.
Budapest is also blocking a joint EU decision on a global plan to introduce a minimum tax of 15% on international corporations in locations where they operate, an OECD project which aims to lessen the impact of international tax havens.
