EU Promises Billions in Aid to Ukraine: Hungary Opposes Financial Aid Redirection

This Tuesday marks the beginning of official negotiations for Ukraine's membership in the European Union

by Sededin Dedovic
EU Promises Billions in Aid to Ukraine: Hungary Opposes Financial Aid Redirection
© John Moore / getty Images

This Tuesday, June 25, official negotiations for Ukraine's membership in the European Union are expected to begin. At the meeting in Luxembourg (starting at 15:30), the EU will present the negotiation framework to the representative of the Ukrainian government, outlining the guidelines for the course of the negotiations.

After the conference with Ukraine, the Union will also open negotiations with Moldova. "The EU is 'life insurance' for both countries," stated German Foreign Minister Annalena Baerbock ahead of the Luxembourg meetings. Ukrainian President Volodymyr Zelensky emphasized that this step "fulfills the European dream" of his compatriots.

The negotiations are expected to last several years, possibly even decades. For Ukraine, at least, peace with Russia is a prerequisite for joining the EU. Even before the start of negotiations with the Union, another piece of good news arrived from Luxembourg for Kyiv.

"Next month, we will make €1.4 billion available to Ukraine, and another €1 billion by the end of this year," promised EU High Representative for Foreign Affairs Josep Borrell. At a press conference after the meeting of EU member states' foreign ministers, he said that this money should be used for air defense, ammunition procurement, and support for Ukrainian industry.

This money actually comes from the interest on frozen Russian assets. There have long been plans to "redirect" this money as aid to Ukrainians. The EU Council has now finally agreed, despite Hungary's opposition, to use 90% of the available interest on Russian assets within the EPF (European Peace Facility) fund to aid Kyiv.

The G7 countries recently reached an agreement to secure loans for Ukrainians with the help of interest income. According to the European Union, over eleven billion euros have already been raised for Ukraine from the EPF between 2022 and 2024.

According to the European Commission, about 210 billion euros of Russian assets are frozen within the EU. Some estimates suggest that the average annual "earnings" from this interest amount to between 2.5 and 3 billion euros.

For 2023, the financial institute Euroclear, based in Belgium, calculated that the interest on Russian assets amounted to 4.4 billion euros, reports DW.

A Legal Maneuver

Borrell also announced that a legal procedure has been found to prevent any form of blockade.

He was likely referring to Hungary and that country's opposition to the idea of redirecting interest income from Russian assets to Kyiv. Hungarian Foreign Minister Péter Szijjártó announced that his country would explore the legal options available to it against the EU's procedure, reported Reuters.

The EU's decision "crosses a red line," said a Hungarian government spokesperson, citing Szijjártó's statement on the platform X. The Hungarian Foreign Minister criticized the "unprecedented violation of common European rules."

Péter Szijjártó, Minister of Foreign Affairs of Hungary© Omar Havana / Getty Images

Hungary Leading the EU

Hungary's blockade regarding Ukraine is nothing new for the EU.

For months, the country has been blocking the sending of new financial aid amounting to several billion euros, as well as military aid. Hungary justifies this policy with fears that additional aid could lead to further escalation of the war.

According to Borrell, the total value of blocked aid for Ukraine amounts to around six billion euros. On the other hand, the European Union is blocking the sending of money to Hungary due to suspicions about the (non)compliance with the rule of law.

Hungary will take over the EU presidency on July 1 for the next six months. Budapest will thus lead the meetings of the Council of Ministers until the end of this year, being a key country for setting the agenda of meetings at the EU level, as well as initiating the adoption of new laws at the Union level.

Given the upcoming role Hungary will take in the EU, and in the context of further support for Ukraine, German Foreign Minister Annalena Baerbock stated on Monday: "We can adopt all these steps together in the Union, as we have done over the past two years.

And we need everyone for that, including the country presiding over the Council."

New Sanctions Against Russia

At the meeting in Luxembourg, EU foreign ministers also adopted a new, 14th package of sanctions against Russia.

This package specifically aims to close some "loopholes" identified in previous sanction measures. However, on one point, the member states did not fully follow the Commission's recommendations due to Germany. The European Commission wanted to penalize companies that "circumvent" sanctions through their subsidiaries in third countries.

The new package only states that companies must "do their best" to ensure such things do not happen. The new package of sanctions also bans the "transshipment" of Russian liquefied natural gas in the EU to reduce Russia's revenue from energy sales.

Lithuanian Foreign Minister Gabrielius Landsbergis commented that the sanctions package had become weaker over time. Russia called the new package of punitive measures "ineffective." The meeting of the Council of Ministers in Luxembourg also discussed the situation in the Middle East and the Western Balkans, reports DW.

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