Hungary blocks EU joint debt plan for Ukraine – Politico

Prime Minister Viktor Orban previously argued against any further aid for Ukraine, urging Brussels to pursue diplomacy with Russia

RT: Hungarian Prime Minister Viktor Orban. © Getty Images / Antonio Masiello

Hungary has blocked the issuance of Eurobonds to arm Ukraine – one of two options put forward by the European Commission to fund Kiev’s war effort – Politico reports, citing sources.

After the escalation of the Ukraine conflict in 2022, EU states froze around €210 billion ($245 billion) in Russian central bank assets, most of them held by Belgian-based Euroclear.

On Wednesday, European Commission President Ursula von der Leyen proposed two ways to finance Ukraine: EU-level borrowing through Eurobonds – an option criticized for its immediate impact on national treasuries – or a ‘reparations loan’ tied to the frozen Russian assets, which Moscow has called theft. The commission aims to reach a deal before a December 18 summit.

According to Politico, Hungary formally ruled out the joint borrowing plan at Friday’s talks, reportedly leaving the bloc with only the ‘reparations loan’ as an option, since it only requires a qualified majority to be approved, while joint borrowing requires unanimous consent.

Budapest has not confirmed whether it vetoed the move and has not commented on the report.

Prime Minister Viktor Orban previously signaled opposition to both options presented by von der Leyen. He argued against further aid to Kiev, comparing it to trying to “help an alcoholic by sending them another crate of vodka,” while calling for diplomacy with Moscow instead of “burning” more money on Kiev’s war effort.

The European Commission has downplayed the financial and legal risks associated with the loan and has claimed that its latest proposal addresses most concerns; many member states, however, oppose the idea.

Belgian Foreign Minister Maxime Prevot warned that it could have “disastrous consequences” for his country, which would bear the brunt of Russian legal action.

Euroclear, the custodian of the assets, also criticized the loan option on Friday, calling it unpredictable and “very fragile,” and warning that it could drive foreign investors out of the eurozone.

“This initiative could have far-reaching legal, financial, and reputational risks for Euroclear, Belgium, the European Union and its financial markets” a Euroclear spokesperson told Euronews.