European Union overcomes threat of Hungary veto to seal $54 billion aid package for Ukraine

By LORNE COOK and SAMUEL PETREQUIN
Associated Press

BRUSSELS (AP) — Leaders of the 27 European Union countries sealed a deal Thursday to provide Ukraine with 50 billion euros ($54 billion) in support for its war-ravaged economy after Hungary dropped weeks of threats to veto the measure.

European Council President Charles Michel said the agreement “locks in steadfast, long-term, predictable funding for Ukraine” and shows the EU’s determination “to support their future, to support freedom.”

The aid package — about two-thirds loans and one-third grants — is not intended to help fight off Russia. Apart from supporting the economy and paying for rebuilding, it’s also aimed at setting Ukraine up for future EU membership. The EU has a separate plan for funding arms and ammunition.

Almost two years after Russia invaded Ukraine, the Ukrainian economy is in shambles. The first months following the 2022 invasion saw the country lose a third of its economic output to wartime destruction and occupation by Russia, which controls Ukraine’s heartland of heavy industry.

Inflation soared to 26% because the central bank had to print money to cover budget gaps. The economy rebounded somewhat last year, but Ukraine spends almost all of its tax revenue on the war. That leaves a huge deficit because other bills must also be paid, including pensions and salaries for teachers, doctors, nurses and state employees.

Political infighting in the EU and the United States has held up funding. A combined total of more than $100 billion is at stake.

Michel said the EU’s move would also send “a signal to the American taxpayers,” which could help the Biden administration in its efforts to get a Ukraine support package through Congress.

In a statement from the White House, President Joe Biden commended the EU’s “steadfast support for Ukraine as it continues to defend itself against Russian aggression and fulfill the Euro-Atlantic aspirations of its citizens.”

Ukrainian President Volodymyr Zelenskyy welcomed the assistance in a post on X, formerly Twitter. He said that continued financial help from the EU would strengthen Ukraine’s long-term economic stability, “which is no less important than military assistance and sanctions pressure on Russia.”

His country could receive the first tranche of money as soon as March, once the European Parliament has endorsed the deal.

That Hungary lifted its veto, and so quickly, came as a surprise.

Hungarian Prime Minister Viktor Orbán, the EU leader with the closest ties to Russia, raised staunch objections to the financial aid in December and blocked its adoption. He threatened to do the same in recent days.

The populist leader’s government has been in a dispute with the European Commission, the EU’s executive branch, over Hungary’s alleged democratic backsliding. Some of his country’s own funding was withheld as a result.

Asked what Orban was offered in exchange for lifting his veto, French President Emmanuel Macron said Hungary “didn’t receive a gift. It simply got the guarantee that the approach toward it will not be discriminatory.″

In December, the 26 other EU leaders agreed that the $54 billion package would run from 2024 through 2027. They also agreed to make Ukraine a candidate for EU membership, which Orbán reluctantly accepted.

But the aid package was part of a review of the EU’s continuing seven-year budget, which requires unanimous approval.

A few leaders, including Michel, German Chancellor Olaf Scholz and Dutch Prime Minister Mark Rutte, met with Orbán on the eve of the summit to test ideas for overcoming his veto. Diplomats then worked late into the night on the final wording of the agreement. The breakthrough came at another small-group meeting early Thursday.

A senior EU official said the last-minute consultations in small groups helped to seal a common position and made Orban understand he was isolated. The official with direct knowledge of discussions asked not to be identified in accordance with EU practices.

To help assuage Orbán, the leaders agreed that the commission would review the budget in two years, if deemed necessary. But such a review would not include an opportunity for a future veto.

Orbán cast the deal as a victory.

“Mission accomplished,” he trumpeted on X. “Hungary’s funds will not end up in Ukraine and we have a control mechanism at the end of the first and the second year. Our position on the war in Ukraine remains unchanged: we need a ceasefire and peace talks.”

On the way into their meeting, some leaders lashed out at Orbán, accusing him of blackmail and playing political games. The tensions come amid mounting concern that public support for pouring more money into Ukraine has started to wane, even though a Russian victory could threaten security across Europe.

“There is no problem with the so-called Ukraine fatigue issue. We have Orbán fatigue now in Brussels,” Polish Prime Minister Donald Tusk told reporters. “I can’t understand. I can’t accept this very strange and very egoistic game of Viktor Orbán.”

Orbán is angry at the European Commission’s decision to freeze his government’s access to billions of euros in joint funding.

In response, Hungary has vetoed statements at the EU on a range of issues. Orbán exported the problem to NATO, by blocking high-level meetings with Ukraine until only recently. Budapest is also holding up Sweden’s bid for membership in the trans-Atlantic military alliance.

“I don’t want to use the word blackmail, but I don’t know what other better word” might fit, Estonian Prime Minister Kaja Kallas told reporters as she arrived at EU headquarters.

“Hungary needs Europe,” she said, highlighting the country’s own economic problems and high interest rates. “He should also look into what is in it for Hungary, being in Europe.”

Tusk insisted that there could be “no room for compromise on our principles, like rule of law. And for sure there is no room for compromise on the Ukraine question.”

The recently elected Polish leader added of Orbán: “If his position will dominate in Europe, then Ukraine will lose for sure.”

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Associated Press writers Raf Casert in Brussels, Geir Moulson in Berlin and Justin Spike in Budapest, Hungary, contributed to this report.

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Follow AP’s coverage of the war in Ukraine: https://apnews.com/hub/russia-ukraine