- Hungary against EUR 18 billion EU loan to Kyiv, OECD minimum tax
- Other 26 EU countries finance Ukraine in other ways
- Ministers are delaying the decision on funds worth nearly 9% of Hungary’s GDP
BRUSSELS (Portal) – Hungary vetoed a 18 billion euro ($19 billion) loan from the European Union to Ukraine on Tuesday, amid rows with the bloc over undermining democracy and the government other 26 Member States delayed a decision on the release of billions of aid to Budapest.
At a meeting of EU economy and finance ministers in Brussels, Hungarian minister Mihaly Varga reiterated his government’s opposition to a loan for Ukraine financed by joint EU bonds. Budapest has announced that it will provide bilateral aid to Kyiv.
However, Varga’s Lithuanian colleague told Portal ahead of the talks that it was “immoral” for Hungary to hold back EU aid to Ukraine. She said Hungary was using this as leverage to get other member states to hand over billions of euros from their common EU budget to Budapest.
On Tuesday, the chairman of the ministerial meeting said Hungary’s position would not prevent other members from helping Ukraine.
“We will not be discouraged. Our ambition remains that we will start disbursing our aid to Ukraine in January,” said Czech Finance Minister Zbynek Stanjura.
“It means that we will look for a solution supported by 26 member states,” he added.
However, without Budapest’s approval, raising the funds will be more complicated and could take longer.
Engaged in a tug-of-war with Hungary, ministers decided on Tuesday to take off the agenda any decision on €7.5 billion in EU money earmarked for Hungary.
Ministers were last week to vote on a recommendation from the bloc’s executive European Commission to freeze money worth 65% of cohesion funds allocated to Hungary from the EU budget until the end of 2027 over corruption risks.
Ministers also delayed any decision on Budapest’s spending plan for an additional €5.8 billion earmarked for Hungary from the bloc’s stimulus fund, set up to help economies recover from the COVID pandemic.
Together, the funds add up to almost 9 percent of Hungary’s estimated GDP for 2022.
“Hungary considers it a dangerous precedent that the payment of EU funds to Hungary is linked to other, completely unrelated matters,” Hungarian government spokesman Zoltan Kovacs said, adding that Budapest meets all the conditions for access to EU funds have.
“We are opposed to making EU funds conditional on a change in our position,” he said.
PRESSURE
Hungary is the only EU country whose blueprint spending plan has yet to be approved – a condition for receiving the funds – with the Commission blocking access for undermining judicial independence in the former communist country.
According to EU law, if the plan is not approved by the end of the year, 70% of the amount will be irrevocably lost. That has allowed Brussels to put pressure on Prime Minister Viktor Orban, who wants to secure the money for his ailing economy.
In his 12 years in power, Orban has regularly fought bitter battles with the EU over LGBT rights and the treatment of migrants in Hungary, where he has also tightened state control over NGOs, academics, courts and the media.
International watchdogs say he has funneled EU funds to his inner circle and entrenched himself in power over the years. Orban denies that Hungary is more corrupt than other EU countries.
Also embroiled in the EU’s row with Orban on Tuesday was an OECD deal that would tax large international companies at a minimum of 15% where they operate.
All 27 member countries are needed for the EU as a whole to join the OECD plan, which Budapest has also blocked.
Given the high level of distrust between Brussels and Budapest, the Commission was not sufficiently convinced by Orban’s recent moves to set up a new anti-graft agency, among other moves aimed at allaying EU concerns about the state of democracy in Hungary.
Germany was among those seeking more time on Tuesday, officials said, and said the bloc could still back the commission’s proposal to withhold funds later in December.
EU countries could also lower the amount to be frozen from 65% if Budapest convinces them it is making real progress, a group of international democracy and rights groups including Transparency International have warned.
“The evidence of the decline of the rule of law in Hungary has been uncovered for years,” they said in a joint letter this week, urging EU countries to ensure funds are not misused to “serve elite interests and perpetuate rights abuses.” .
($1 = 0.9510 euros)
Reporting by Jan Strupczewski and Gabriela Baczynska, editing by Raissa Kasolowsky, Alexandra Hudson
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