European Union leaders reached on Thursday morning a deal to establish a €50-billion plan for Ukraine after Viktor Orbán lifted his veto.
ADVERTISEMENTThe 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 billion 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 was green-lighted as part of a €64.6-billion review of the bloc's common budget. New top-ups have been added to the area of migration and border control (€9.6 billion), cutting-edge technologies (€1.5 billion), emergency assistance (€1.5 billion) and a flexibility instrument to react to unforeseen crises (€2 billion).
"We've got the 27 heads of state and government to reach a political agreement that will allow us to mobilise €50 additional billion as part of the Ukraine Facility," said Charles Michel, the president of the European Council, at the end of the meeting.
"I think this decision sends a very clear message to the Ukrainians and shows our determination to be fully mobilised to support their future and freedom. And it's also a message to our European populations that shows (..) we're not intimidated by Russia."
European Commission President Ursula von der Leyen, who had initially drafted a €100-billion budget revision, said leaders made "some difficult choices" to slash the amount of net contributions, but that the final €64.6-billion outcome was "very good."
"With this agreement, Europe stands united and is well-equipped for the challenges ahead. In other words, today Europe got stronger," von der Leyen said.
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 has exploited in the past to derail collective decisions and extract concessions and which drew 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."
Annual debate without vetoes
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 multi-annual budget comes to an end in two years.
In a short video posted on X, Orbán claimed "mission accomplished" and described the annual debate as a "control mechanism that guarantees the reasonable use of money," even though a monitoring system was already embedded in the original legislation.
ADVERTISEMENT"We were afraid the EU funds due to the Hungarians, which the Commission has not given us so far, would sooner or later end up in Ukraine. And we were also afraid that we would make resources available to Ukraine for too long and without control," the premier says in the video. "After a long negotiation, we accepted this offer."
Asked if she had promised Orbán to unlock funds in exchange for his blessing, von der Leyen said the answer was a "simple no."
"The story is very simple: there is a law on cohesion, there is a law on Next Generation EU and there is a law on the conditionality mechanism," von der Leyen said, referring to the legal texts that were used to paralyse the funds.
"And these laws have nothing to do with the Ukraine Facility and the mid-term (budget) review. This was reassured today."
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, Ursula von der Leyen, French President Emmanuel Macron, German Chancellor Olaf Scholz and Italian Prime Minister Giorgia Meloni.
ADVERTISEMENTMeloni, 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.
From Kyiv, President Volodymyr Zelenskyy welcomed the unanimous endorsement and expressed relief the political standoff was finally over.
"By launching the EU's Ukraine Facility, we are creating a sustainable financial instrument that will work not only today but also tomorrow and will strengthen Ukrainian resilience, which in turn will prevent the spread of Russian aggression to other parts of Europe," Zelenskyy said.
The agreement on the Ukraine Facility is not yet final: the Council and the European Parliament still have to negotiate the legal text, a process expected to be fast-tracked due to the growing urgency of sending fresh money to Kyiv.
ADVERTISEMENTThe first round of talks is scheduled to take place on Monday in Strasbourg.
Although the €50 billion earmarked for the 2024-2027 period averages €12.5 billion per year, the envelope is not "rigid" and will not be "evenly distributed," said von der Leyen. Instead, the cash will be adapted "as it is needed and best allocated."
Last year, the EU provided Ukraine with €18 billion in macro-financial support.
This article has been updated to include more information about the extraordinary summit in Brussels.