EU Prepares Support Plan for Ukraine Bypassing Hungary’s Veto

The Financial Times has reported that the EU is preparing a “plan B” to allocate 20bn euros to Ukraine bypassing Hungary’s veto. The funds may be borrowed against guarantees of the EU member states. Kyiv should receive the aid by March at the latest. The European Union is preparing a “plan B” to allocate 20bn euros of macro-financial aid to Ukraine until 2027, bypassing Hungary’s veto, if no agreement can be reached with Budapest. This was reported by the Financial Times on Wednesday, 27 December, citing authoritative sources. According to them, the necessary funds can be borrowed on the capital markets against guarantees that its member states will assume before the EU budget. Such a scheme will not require approval from all EU countries - unlike the allocation of money from the EU budget, which Hungary opposes. The guarantees will have to be provided by countries with high credit ratings; some of them - such as Germany and the Netherlands - will need parliamentary approval. But Brussels plans to finalize these procedures by March, the deadline set for aid to Kyiv. The downside of this plan is that it will not imply centralized allocation of EU grants to Ukraine. However, individual member states will be able to do so on a bilateral basis, the FT sources said. Another backup plan, they say, is to provide Ukraine with cheap short-term loans. Under this scheme, Kyiv has already received 18bn euros from Brussels in the passing year. But this option will require the approval of the majority of EU countries. The allocation of the IMF tranche depends on the EU decision If EU leaders reach a consent on macro-financial aid to Ukraine at a planned summit on 1 February, it will guarantee Kyiv a new tranche of about $900 million from the International Monetary Fund (IMF), the Financial Times said. This will allow Kyiv not to print money to cover the budget shortage, which is fraught with rising inflation, the article goes on to say. Hungary has been blocking aid to Ukraine since June Hungary has been blocking EU attempts to allocate macro-financial aid to Kyiv since June. The country’s Prime Minister Viktor Orban demands, firstly, that Ukraine report on how it has spent the funds already allocated to it, and secondly, that Brussels unblock the EU aid due to Budapest, which was frozen because doubts about the independence of the Hungarian judiciary. Before the EU summit on 14 December, 10bn of these funds were unblocked, but Hungary still vetoed the allocation of aid to Ukraine.