What conditions EU set for Ukraine, allocating €50bn, and what concessions Orbán had to make

Friday, 2 February 2024

The leaders of the 27 EU member states adopted amendments to the budget at the summit on 1 February, aimed at allocating 50 billion euros for financial aid to Ukraine.

This four-year programme, named Ukraine Facility, will serve as the basis for Ukraine's cooperation with the EU in the near future.

Read more in the article by Oleh Pavliuk and Sergiy Sydorenko, journalists of European Pravda – Without concession to Orbán and with demands for Kyiv. How EU approved 50 billion euros in aid to Ukraine.

Last year, Brussels proposed creating a special mechanism to support Ukraine's economy called Ukraine Facility, intended to ensure funds availability over several years, providing stability to Kyiv.

This four-year programme, totaling 50 billion euros, consists of non-repayable assistance (17 billion euros) and preferential long-term loans (33 billion euros). The EU plans to finance grant funds, in part, using frozen Russian assets.

Unlike previous "war" macro-financial programmes, this one sets conditions for providing money to Ukraine to stabilise its budget.

A detailed list of conditions is yet to be agreed upon. It will likely be amended over the four years. Their main points, however, are known now.

The EU summit has briefly listed these conditions: "Ukraine continues to uphold and respect effective democratic mechanisms."

The key point determining aid to Kyiv, as defined by the EU summit, is to "respect... a multiparty parliamentary system." This is indeed a new objective in Kyiv's relations with Brussels.

Hungary had been blocking the approval of this programme since the last autumn. Throughout January, the rest of the EU exerted significant, even unprecedented pressure on Hungary, forcing it to agree.

Just days before the EU summit, an internal document from the EU Council secretariat, allegedly describing a plan to "derail Hungary's economy" in case Orbán undermines European unity on this issue, was leaked to the Financial Times. The head of the Hungarian Prime Minister's Office spoke of Budapest being "blackmailed."

Orbán, eventually, has simply given in and voted for 50 billion euros for Ukraine without much persuasion.

But it's not just about pressure. He was interested in approving aid for Ukraine.

The Hungarian Prime Minister found himself in harsh isolation within the EU. And ahead of the pan-European elections and the formation of the new European Commission, Orbán needs allies in Europe. Potential allies demand an improvement in relations between Budapest and Kyiv.

So, the EU summit has adopted a compromise decision on 50 billion euros for Ukraine, allowing Orbán to "sell" it at home, in Hungary, as his next victory.

He made concessions and agreed to a control mechanism (as well as mentioning minority rights in the demands). Throughout all four years, the EU Council will retain the ability to suspend funding to Ukraine. Moreover, on a monthly basis.

Ukraine's main victory, however, is no annual plan review, specifically demanded by the Hungarian Prime Minister. Furthermore, Orbán will not be able to unilaterally block funding for Ukraine.

The approval or suspension of tranches will be decided by a qualified majority vote (more than half), not unanimously.

A majority vote will be also required to amend the list of EU demands on Ukraine.

As explained by Deputy Prime Minister and Minister of Economy Yulia Svirydenko, the final approval of Ukraine Facility by the European Council and the European Parliament is set for late February.

The conclusions of the extraordinary EU summit have other positive signals for Ukraine.

If you notice an error, select the required text and press Ctrl + Enter to report it to the editors.