Hungary has officially rejected the idea of issuing eurobonds to finance support for Ukraine. This decision significantly complicates the search for alternative funding sources for Kyiv within the European Union. Budapest’s refusal deprives the EU of the opportunity to implement the so-called “Plan B” in case it fails to access frozen Russian assets to provide a loan to Ukraine amounting to 165 billion euros.
This is reported by Finway
Reasons for the Blockage and Positions of EU Member States
The plan to issue joint eurobonds backed by the EU budget for seven years could have become an important source of funds for Ukraine; however, Hungary has categorically dismissed this idea. The refusal came just before an important dinner between German Chancellor Friedrich Merz and Belgian Prime Minister Bart De Wever in Brussels, where they discussed the issue of financing Ukraine. Merz expressed his intention to involve De Wever in dialogue on this matter.
“I take the concerns and objections of the Belgian Prime Minister very seriously. I do not want to convince him; I want to persuade him of the correctness of the path we are proposing.”
To persuade the Belgian side, Germany offered a guarantee of returning 25% of the total loan amount. However, Bart De Wever insists on broader security guarantees from all EU member states, so that in case of legal risks, Belgium would be fully compensated or even compensated in larger amounts.
Funding Prospects and Belgium’s Demands
The European Commission considers the issuance of eurobonds as one of the possible options alongside a loan secured by frozen Russian assets to avoid a financial crisis in Ukraine as early as next spring. However, unanimous approval from all member states is required to access borrowed funds from the EU budget, which is currently lacking due to Hungary’s position.
The European Commission insists that its proposals address most of Belgium’s concerns and downplays the financial and legal risks associated with providing the so-called reparations loan.
At the EU leaders’ summit scheduled for the end of December, the European Commission aims to reach an agreement among the 27 countries regarding financial assistance to Kyiv. The main option involves using frozen reserves of the Central Bank of Russia; however, Belgium opposes this due to the risk of lawsuits from Moscow, as it holds the majority of these assets.
The reparations loan involves allocating 115 billion euros over five years to support Ukraine’s defense industry, with an additional 50 billion for covering budget expenditures. Belgium is willing to make concessions only if three key demands from the European Union, which are currently under negotiation, are met.