Brussels is on Thursday set to be the scene of a momentous summit where European Union leaders will plead with Viktor Orbán to lift his intractable veto on a €50-billion special fund for Ukraine.
ADVERTISEMENTThe Hungarian premier is 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 Orbán made good on his threat and blocked the proposed €50-billion fund leaving the European Commission without any more cash to wire. The legislative impasse in Washington has only compounded the dramatic situation, making Thursday's summit a make-or-break date in which leaders have no choice but to break the impasse somehow.
Approving the Ukraine Facility, which is tied to a wider review of the bloc's common multi-year budget, requires a unanimous endorsement, a voting rule that Orbán has masterfully exploited in the past to derail collective decisions and extract concessions.
"The unanimity principle is a very important, key element of our democracy, especially looking from the perspective of small-sized countries like my country," said Lithuanian President Gitanas Nausėda, upon arriving at the extraordinary summit.
"What is happening now, I think, is the prime minister of Hungary is misusing the unanimity principle and we should defend it."
Donald Tusk, Poland's prime minister, delivered a biting rebuke against his Hungarian counterpart, decrying his "very strange and very egoistic game."
"There's no problem with the so-called Ukraine fatigue, for sure. We have Orbán fatigue now," Tusk said. "There is no room for compromise on our principles, like the rule of law. And for sure, there is no room for compromise on the Ukraine question."
Estonia's Kaja Kallas, a staunch supporter of Kyiv, also vented her frustration and said the bloc should discuss "how to really break this pattern" of filibustering.
"Viktor definitely wants to be the centre of attention every time we are here but it shouldn’t be like this," Kallas told reporters on Thursday morning. "I don't want to use the word blackmail, but I don't know a better word."
Officials in Brussels have spent the past weeks scrambling to understand what exactly Hungary wants in exchange for lifting the veto. However, according to diplomats who spoke on condition of anonymity due to the ongoing negotiations, the signals they so far received from Budapest have been irritating at best and unpalatable at worst.
Under the proposal on the table, the Commission will oversee the disbursements of the Facility, averaging €12.5 billion in a mix and grants every year until 2027, and report back to the Council and the European Parliament. Kyiv, in turn, is expected to meet a series of conditions to gradually access the funds.
Hungary demands an annual review of the entire facility, an idea that diplomats interpret as a poorly-veiled attempt to ensure that Orbán would have ample opportunities to wield his veto. Additionally, the country has asked for changes to the COVID-19 recovery funds, which it has been unable to unlock due to rule-of-law deficiencies.
Budapest has 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 need to be progressively repaid.
On top of that, Orbán and his deputies have become increasingly vocal about the release of frozen cohesion funds. Although the Commission controversially unsealed €10.2 billion right before the December summit, about €11.7 billion remains held up. Together with the recovery plan, nearly €22 billion are paralysed.
The amalgam of unrelated requests suggests there might be space, albeit limited, to find a compromise at the end of Thursday's meeting. As a manageable alternative to the annual review, some countries have floated an "annual debate" about the Facility's implementation, rather than its core principles and financial figures. The high-level discussion will not be subject to a vote and therefore shielded from veto.
"I agree we can have a debate on how the process is going on (but) I don’t agree we have to decide every year from the beginning. It just makes all this not predictable for Ukraine," said Evika Siliņa, Latvia's prime minister.
"Ukraine needs predictable and long-term financing. It is also a promise we have given from Europe. We have to fulfil that promise and I don't think we have to compromise there to Orbán," she added.
If Orbán digs his heels in and refuses to budge, leaders could be forced to opt for a makeshift solution backed only by 26 member states. Building a new financial structure from scratch, instead of using the existing EU budget, will be energy-consuming and entail parliamentary procedures at a national level.
ADVERTISEMENTMore worryingly, such a Plan B would mark the death of the political unity built in the wake of Vladimir Putin's decision to launch the all-out invasion. The unity, which Orbán has repeatedly put to the test, has been instrumental in approving 12 rounds of sanctions against the Kremlin and ensuring continued financial and military support for Ukraine.
The stakes have become so high – and the odds so precarious – that some officials have revived the long-dormant conversation about Article 7, the "nuclear option" under the EU treaties to rein in countries who commit serious breaches of the bloc's fundamental values. Under the article's very last step, which has never been triggered, the accused state can be stripped of voting rights.
But moving Article 7 forward requires unanimity and it's unclear if all the 26 will be on board with the idea of punishing Hungary in such a radical way. Slovakia, under Robert Fico's rule, is the first guess in Brussels when it comes to potential obstacles.
"Hopefully it won't come to that. That procedure is very complicated. It's a procedure that takes away the voting rights of a member," said Taoiseach Leo Varadkar. "But if we embark down that road, it could be months to a year before that can be made effective. So that won't give us the outcome that we need here today."
The obstruction of the Ukraine Facility has hindered the review of the bloc's common budget. In the proposal that was nearly approved in December, member states agreed to earmark €9.6 billion for migration, €1.5 billion for cutting-edge technologies, €1.5 billion for emergency assistance and €2 billion for a flexibility instrument for unforeseen crises.
ADVERTISEMENTFrom the very beginning, Brussels linked the Facility to the budget top-ups and made the two inseparable from each other. Speculation about a "decoupling" strategy has been simmering for months and could turn into action if Orbán insists on his veto.
Besides the Ukraine aid and the common budget, leaders will discuss ammunition deliveries to Kyiv, the Israel-Hamas war, the crisis in the Red Sea, the controversy surrounding UNRWA and the growing farmers' protests.