The European Union has reportedly come up with a new plan to circumvent its own rules in order to give further financial assistance to Ukraine. Hungary’s Prime Minister Viktor Orbán was the only leader at the last EU summit to block €50 billion worth of EU support that Brussels wants to disburse to Kyiv over the next four years. Rather than abiding by the laws governing the bloc, the EU is plotting a ‘Plan B’ to achieve this, should Hungary maintain its veto at the planned February 1 emergency summit.
This scheme would involve the European Commission borrowing up to €20 billion on capital markets for Kyiv next year, made possible by participating member states issuing guarantees to the EU budget. The precise terms are still under discussion and the final amount would be set according to Ukraine’s needs, writes the Financial Times, citing EU officials.
The arrangement is similar to a programme utilised during the COVID pandemic, when the EU provided €100 billion worth of financial assistance to member states in the form of loans granted on favourable terms to protect jobs and workers affected by the pandemic.
‘Plan B’ would not require a unanimous decision, or guarantees from all the EU’s 27 member states, as long as the main participants included countries with top credit ratings. In countries such as Germany and the Netherlands, parliamentary approval would be needed for national guarantees, but the question remains whether a new conservative government led by Geert Wilders would have a more critical approach with regards to funding Ukraine. The increasing popularity in Germany of Alternative für Deutschland (AfD), whose top candidates have consistently been critical of financial as well as military support to Ukraine, may also affect the decisions of the increasingly rocky governing ‘traffic light coalition.’
Additionally, it is unclear how many member states would support a ‘Plan B’ scheme, as more countries than Hungary have expressed scepticism toward the EU going into debt to fund Ukraine.
Through the so-called Ukraine Facility, the EU wants to support Ukraine’s efforts to “sustain macro-financial stability, promote recovery, rebuild, and modernise the country by providing grants and loans, whilst also implementing key reforms on its EU accession track in that period.”
Hungary’s Viktor Orbán blocked the decision to fund the Ukraine Facility at the December European Council Summit, saying EU funding to Ukraine must not be granted from the EU’s budget. Hungary, he added, does not want to engage in collective borrowing and go into debt along with other countries. Plans to fund Ukraine should be limited to more short-term assistance. “The Hungarian perspective is that if we want to give money to Ukraine, then we shouldn’t give it for a five-year period because we have no idea what will happen in the next three months,” he said at a news conference last week. He emphasised that financing should be based on individual contributions from member countries.
