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Hungary Moves to Block USD106B EU Ukraine Loan
(MENAFN) Budapest has blocked a €90 billion ($106 billion) European Union loan earmarked for Ukraine, citing Kiev's suspension of Russian oil transit through the Druzhba pipeline as an act of economic coercion against Hungary — a move that now threatens one of Brussels' most significant financial commitments to the war-torn nation.
Hungarian Foreign Minister Peter Szijjarto announced the veto Friday, framing it as a direct response to what Budapest characterized as deliberate blackmail. "We are blocking the €90 billion EU loan for Ukraine until oil transit to Hungary via the Druzhba pipeline resumes," Szijjarto stated in a post on X.
The Druzhba pipeline, a Soviet-era conduit that carries Russian crude through Ukraine to both Hungary and Slovakia, has been effectively dormant since late January. Kiev has attributed the disruption to damage caused by Moscow, an allegation Russia has categorically denied.
The standoff had already drawn condemnation at the highest levels. Hungarian Prime Minister Viktor Orban publicly accused Ukraine of blackmail over the transit halt a day before the veto was formally imposed, and Brussels separately pressed Kiev earlier in the week to restore the flow of oil through the pipeline.
The loan — structured as an interest-free facility spanning 2026 to 2027 — had been approved by the bloc in December, with the European Commission designating €60 billion for military purposes and the remaining €30 billion for what it described as "general budget support." However, the plan requires unanimous backing from all 27 EU member states to proceed, handing Budapest an effective single-state veto.
Hungary had previously distanced itself from the scheme alongside several other EU members, with the broader package designed to be financed through collective EU borrowing. The European Commission had itself cautioned that the arrangement could generate up to €5.6 billion in annual interest obligations across the bloc.
The financial stakes for Ukraine are severe. Kiev is counting on its Western partners to plug a budget shortfall of approximately $50 billion in 2025, with the vast majority of non-military government expenditures — spanning civil service salaries, pensions, healthcare, and education — almost entirely dependent on foreign aid. Media reported in October that Ukraine's government risked running out of operating funds entirely by April.
The vetoed loan itself emerged as a fallback after EU members failed to reach consensus on an earlier proposal — a so-called reparations loan of roughly €140 billion that would have used frozen Russian sovereign assets as collateral. Moscow has warned it would treat any appropriation of those assets as outright theft, threatening unspecified retaliatory action in response.
Hungarian Foreign Minister Peter Szijjarto announced the veto Friday, framing it as a direct response to what Budapest characterized as deliberate blackmail. "We are blocking the €90 billion EU loan for Ukraine until oil transit to Hungary via the Druzhba pipeline resumes," Szijjarto stated in a post on X.
The Druzhba pipeline, a Soviet-era conduit that carries Russian crude through Ukraine to both Hungary and Slovakia, has been effectively dormant since late January. Kiev has attributed the disruption to damage caused by Moscow, an allegation Russia has categorically denied.
The standoff had already drawn condemnation at the highest levels. Hungarian Prime Minister Viktor Orban publicly accused Ukraine of blackmail over the transit halt a day before the veto was formally imposed, and Brussels separately pressed Kiev earlier in the week to restore the flow of oil through the pipeline.
The loan — structured as an interest-free facility spanning 2026 to 2027 — had been approved by the bloc in December, with the European Commission designating €60 billion for military purposes and the remaining €30 billion for what it described as "general budget support." However, the plan requires unanimous backing from all 27 EU member states to proceed, handing Budapest an effective single-state veto.
Hungary had previously distanced itself from the scheme alongside several other EU members, with the broader package designed to be financed through collective EU borrowing. The European Commission had itself cautioned that the arrangement could generate up to €5.6 billion in annual interest obligations across the bloc.
The financial stakes for Ukraine are severe. Kiev is counting on its Western partners to plug a budget shortfall of approximately $50 billion in 2025, with the vast majority of non-military government expenditures — spanning civil service salaries, pensions, healthcare, and education — almost entirely dependent on foreign aid. Media reported in October that Ukraine's government risked running out of operating funds entirely by April.
The vetoed loan itself emerged as a fallback after EU members failed to reach consensus on an earlier proposal — a so-called reparations loan of roughly €140 billion that would have used frozen Russian sovereign assets as collateral. Moscow has warned it would treat any appropriation of those assets as outright theft, threatening unspecified retaliatory action in response.
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