Hungary Slaps Down €18 Billion EU Aid Package for Kiev

Hungary has adhered to an independent position on Ukraine throughout the current crisis, owing to its difficult relationship with Kiev. The two have been engaged in a long-running dispute going back to the 2014 Ukrainian coup, which brought a nationalist government to power that has discriminated against Ukraine’s ethnic Hungarian minority.

Hungarian Finance Minister Mihaly Varga has blocked an €18 billion concessionary loan package for Ukraine.

“[As] we talked about earlier, Hungary is not in favor of the amendment of the financial regulation,” Varga said at an EU finance ministers’ meeting on Tuesday, cutting short debate on the issue.

The meeting also included talks on the ongoing "rule of law" spat between Brussels and Budapest, under which the EU has threatened to suspend some €7.5 billion in funds promised to Hungary over its failure to pass a 17-point series of reforms, as well as a new 15 percent global flat tax rate for large corporations. Hungary and the rest of the EU failed to agree on any of these issues at Tuesday's gathering.

On Ukraine, Hungarian officials had previously indicated that Budapest would prefer that countries provide assistance on a bilateral basis, not an EU-wide mechanism, through which new financial support would be provided via the issuance of debt.

“We were unable to pass the aid package, but we will not give up. Our goal remains to start providing assistance to Ukraine in early January,” Czech Finance Minister Zbynek Stanjura said after Hungary blocked the €18 billion in proposed aid.

“In the end, agreement was found on formulations that allow a flexible and quick way to deploy funds to Ukraine without fundamentally changing the way the EU manages its funds. I say agreement, but in reality that agreement was minus one,” EU Council Economic and Financial Committee Chairman Tuomas Saarenheimo complained.

“Ukraine is a country at war, it desperately needs our support and we just cannot allow one member state to delay and derail this EU financial support,” EC Vice-President Valdis Dombrovskis said. “We must deliver it, one way or another, and we will do it.”

The government of Prime Minister Viktor Orban has repeatedly demonstrated its independence from Brussels on a broad range of domestic and foreign policy issues, from immigration to tolerance for "civil society" organizations operating in Hungary. Amid the Ukraine crisis, Hungary has refused to reduce energy deliveries from Russia, and refused to allow NATO to send military equipment to Ukraine through its territory.

Budapest’s approach to the crisis stems in part from its criticism of successive Ukrainian governments’ treatment of the 156,000+ strong community of ethnic Hungarians living in southwestern Ukraine, near the border with Hungary, who have faced discrimination, and been deprived of their right to receive an education in their native language.

On Tuesday, Hungarian Prime Minister Viktor Orban called for a review of anti-Russian sanctions, saying that Europe’s energy crisis would have to be addressed “swiftly” to prevent its industrial base from disappearing.