Since Russia’s invasion of Ukraine, the Ukrainian economy has been in shambles. In the first months following the start of the war in 2022, Ukraine lost one-third of its economic income sources due to Russia’s strategic positioning and control over the heavy industry center. While the Ukrainian government discusses how to address the country’s ammunition gap resulting from the war, European Union (EU) leaders are calling for increased support to Ukraine.
As a result of having to print money to cover the budget deficit, the inflation in Ukraine has risen to 26%. Although the country’s economy had partially recovered last year, almost all tax revenues are being spent on the war. This makes it challenging to cover other government expenses, including pensions, salaries of teachers, doctors, nurses, and other public servants.[1]
On February 1, 2024, during the summit, the EU reached an agreement on a financial package of over $50 billion for Ukraine. According to an official text published by the EU Council, it was approved that the 27 member countries would send €50 billion to Ukraine between 2024 and 2027. The financing details of this support were outlined in the text, with €33 billion provided as credit and €17 billion as non-repayable support from frozen Russian assets. The text repeatedly emphasizes that this money will be used as part of Ukraine’s process of joining the bloc.[2]
During the Leaders’ Summit, the President of the European Council, Charles Michel, made a statement on his social media account, stating, “All 27 leaders have reached an agreement on an additional €50 billion support package for Ukraine within the framework of the EU budget. The EU is taking leadership and responsibility in supporting Ukraine. We are aware of the extent of the danger.”[3] Michel emphasized that this represents a “stable, long-term, and predictable” guarantee of support for Ukraine.
The President of the European Commission, Ursula von der Leyen, commented, “The European Council has fulfilled our priorities: supporting Ukraine, combating illegal migration, and supporting Europe’s competitiveness. A great day for Europe.” The President of the European Parliament, Roberta Metsola, stated in a social media post that the agreed €50 billion will be used to assist Ukraine in its restructuring and reforms during the process of EU membership. Metsola shared the message, “We owe this to the people of Ukraine. We owe this to the people of Europe because Ukraine’s security is Europe’s security.” Belgian Prime Minister Alexander De Croo also expressed in his post, “The EU is keeping its promise to Ukraine. The people of Ukraine and President Volodymyr Zelensky are fighting for the freedom of all Europeans.”[4]
As a reminder, shortly after the decision to start membership negotiations with Ukraine and Moldova and grant candidate status to Georgia at the EU Summit held in Brussels on December 14, 2023, the €50 billion aid package offer to Ukraine was vetoed by Hungarian Prime Minister Viktor Orban. The basic conditions set by Viktor Orban to withdraw the veto were to re-evaluate the annual aid to be provided for a period of 4 years and to retain the right to veto during this period.[5] Orban also demanded unanimity for the annual renewal of the aid package. Orban stated the following:[6]
“We have decided to make a compromising offer: okay, we are not in agreement that the budget should be changed and that we should provide the large amount of €50 billion. We are also not in agreement that this should be guaranteed for four years. However, if we are assured that we will decide every year whether to send this money or not, Hungary is ready to participate in the decision. And this annual decision should have the same legal basis as today: it should be taken unanimously.”
During this process, one of the controversial events was a leaked document prepared by EU officials, published by the Financial Times on January 28, 2024. According to the document, if Hungary did not backtrack on the veto, the EU would call on member states to cut off all EU funds provided to Budapest.[7]In response, Hungarian Prime Minister Viktor Orban expressed his suspicion that the EU could undermine the country’s economy, which would lead to catastrophe in Hungary. Hungarian officials also declared that they would not “succumb to blackmail.”
The European Commission has stated that it was not aware of the draft document allegedly circulating within the EU suggesting undermining Hungary’s economy. Orban expressed his lack of doubt about the authenticity of the document and emphasized that officials in Brussels could indeed do such a thing, stating, “Then there would be a catastrophe in Hungary. The document published by the Financial Times says the same thing”[8]
In conclusion, while debates have escalated within American politics regarding the US financial support to Ukraine, the EU’s intervention to assist Ukraine has been a critical move for Kiev to maintain its presence on the frontlines. Considering that €17 billion of the €50 billion comes from frozen Russian assets, it can be expected that tensions between the EU and Russia will increase in the near future, and the dialogue will gradually diminish. The disruption of unanimity within the EU by actors like Hungarian Prime Minister Viktor Orban also complicates the consolidation of the EU’s stance on Ukraine.
[1] Cook, L., et al., “European Union Overcomes Threat Of Hungary Veto To Seal $54 Billion Aid Package For Ukraine”, AP News, https://apnews.com/article/ukraine-war-russia-hungary-eu-summit-budget-6d0f11bc16b4b21073f92925de2046e4, (Accession Date: 04.02.2024).
[2]McGee, L., “EU Agrees $50B Funding Deal For Ukraine At Pivotal Time in The War”, CNN, https://edition.cnn.com/2024/02/01/europe/eu-ukraine-funding-deal-intl/index.html, (Accession Date: 01.02.2024).
[3]““The EU Agreed on a 50 Billion Euro Support Package for Ukraine in its Budget”, Sputnik, https://sputniknews.com.tr/20240201/ab-butcesinden-ukraynaya-50-milyar-euroluk-destek-paketi-uzerinde-uzlasti-1080269851.html, (Accession Date: 01.02.2024).
[iv]“First Statement from the EU Regarding the Compromise on the Support Package for Ukraine: ‘A Good Day for Europe’”, Sputnik, https://sputniknews.com.tr/20240201/ukraynaya-destek-paketindeki-uzlasmaya-iliskin-abden-ilk-aciklama-avrupa-icin-guzel-bir-gun-1080272626.html, (Accession Date: 01.02.2024).
[5]Brzozowski, A., “Hungary Doubles Down On Ukraine Aid Demands”, Euractiv, https://www.euractiv.com/section/europe-s-east/news/hungary-doubles-down-on-ukraine-aid-demands/, (Accession Date: 01.02.2024).
[6]“Hungarian Prime Minister Orban Required ‘Conditions’ for EU Aid to Ukraine”, Sputnik, https://sputniknews.com.tr/20240130/macaristan-basbakani-orban-abnin-ukraynaya-yapacagi-yardim-icin-sart-kostu-1080189164.html, (Accession Date: 02.02.2024).
[7] Basmat, D., “Financial Times: Leaked Document Reveals EU Considering Cutting Off Funding To Hungary Over Ukraine Aid Veto”, Kyiv Independent, https://kyivindependent.com/financial-times-leaked-document-reveals-eu-considering-cutting-off-funding-to-hungary-over-ukraine-aid-veto/, (Accession Date: 02.02.2024).
[8] Ibıd.
