European Union leaders reached on Thursday morning a deal to establish a €50-billion plan for Ukraine after Viktor Orbán lifted his veto.
The decision was taken surprisingly fast at the beginning of an extraordinary summit in Brussels, where financial aid for Kyiv was at the very top of the agenda.
The special fund, known as the Ukraine Facility, combines €33 billion in loans and €17 in grants and will be gradually disbursed between 2024 and 2027. Payments will be conditional on the completion of structural reforms related to public administration, good governance, the rule of law and the fight against corruption and fraud.
The Facility is tied to a wider review of the bloc’s common budget that includes top-ups for migration, border control, cutting-edge technologies and crisis management.
“All 27 leaders agreed on an additional €50 billion support package for Ukraine within the EU budget,” Charles Michel, the president of the European Council, announced in a short message on social media.
“This locks in steadfast, long-term, predictable funding for Ukraine. EU is taking leadership & responsibility in support for Ukraine; we know what is at stake.”
Until Thursday morning, Viktor Orbán had been single-handedly blocking the release of fresh money for Kyiv, despite repeated pleas from the war-torn nation, which needs $37.3 billion, or €34.45 billion, in Western donations to keep its economy running in 2024 and sustain essential services such as healthcare, education, social protection and pensions.
The sense of urgency ratcheted up in mid-December when the Hungarian premier made good on his threat, derailed the proposed €50-billion fund and left the European Commission without any more cash to wire. The legislative impasse in Washington only compounded the dramatic situation, making this week’s summit a make-or-break date in which leaders had no choice but to break the deadlock somehow.
Approving the Ukraine Facility required a unanimous endorsement, a voting rule that Orbán exploited in the past to derail collective decisions and extract concessions and which drew him the ire of most of his colleagues on Thursday.
“The unanimity principle is a very important, key element of our democracy, especially looking from the perspective of small-sized countries like my country,” Lithuanian President Gitanas Nausėda said upon arriving at the summit.
“What is happening now, I think, is the prime minister of Hungary is misusing the unanimity principle and we should defend it.”
Among his various demands, the Orbán had asked for an annual review of the €50-billion fund, something that officials in Brussels interpreted as a thinly veiled attempt to ensure his veto power could be slapped back in the following year.
Additionally, Hungarian officials had requested the immediate release of the nearly €22 billion in cohesion and recovery funds that the Commission is still withholding over persistent rule-of-law deficiencies. Orbán often refers to this situation as “financial blackmail” and uses it as a recurrent subject in his anti-EU speeches.
Budapest had also expressed opposition to paying for the interest rates that stem from the Ukraine Facility and the COVID-19 recovery funds, both of which are partially financed by the joint issuance of debt and will have to be progressively repaid.
The compromise reached on Thursday foresees that EU leaders “will hold a debate each year on the implementation of the Facility with a view of providing guidance,” but that such discussion will not be subject to a vote, meaning vetoes will not apply.
“If needed,” the compromise adds, leaders might invite the Commission to propose a review of the aid once the current multi-annual budget comes to an end in two years.
The text does not include any concessions on frozen funds or interest rates.
It is understood the final push to break the gridlock happened right before the summit began on Thursday morning, during a private meeting with Viktor Orbán, Charles Michel, European Commission President Ursula von der Leyen, French President Emmanuel Macron, German Chancellor Olaf Scholz and Italian Prime Minister Giorgia Meloni.
Meloni, a politician who campaigned on a strong Eurosceptic platform but has since then softened her stance, has fashioned herself as the most dexterous mediator between Budapest and Brussels. Meloni and Orbán held bilateral talks on Wednesday evening in anticipation of the high-stakes meeting.
Shortly after the breakthrough, leaders took to social media to celebrate the news. Belgium’s Alexander De Croo, the Netherlands’ Mark Rutte, Czechia’s Petr Fiala, Estonia’s Kaja Kallas, Latvia’s Evika Siliņa and Poland’s Donald Tusk were among those declaring the survival of European unity and solidarity.
“A good day for Europe,” von der Leyen said.
From Kyiv, President Volodymyr Zelenskyy expressed his gratefulness and relief.
“It is very important that the decision was made by all 27 leaders, which once again proves strong EU unity,” Zelenskyy said. “Continued EU financial support for Ukraine will strengthen long-term economic and financial stability, which is no less important than military assistance and sanctions pressure on Russia.”
The political decision on the Ukraine Facility enables the start of formal negotiations between the Council and the European Parliament, which are expected to be fast-tracked due to the growing urgency of sending fresh money to Kyiv.
The first round of talks is scheduled to take place on Monday in Strasbourg.