FT: EU plans to threaten squeezing Hungarian economy if Orbán vetoes aid to Ukraine

Hungarian Prime Minister Viktor Orbán may be threatened with a cut in EU funds at the extraordinary summit of EU leaders in Brussels on 1 February, The Financial Times reports, citing a secret document its journalists were granted access to. At the December summit of EU leaders, Orbán vetoed the EU using a joint loan to provide financial assistance to Ukraine. In principle, EU member states would have the option of taking out loans individually rather than collectively to finance Ukraine's operation, but this would make the loan itself somewhat more expensive and would also be politically riskier, as it would require the consent of the parliament in several member states.

According to the FT, the proposal suggests that if Orbán continues to be unwilling to cooperate in a constructive fashion, the EU should withdraw funds from Hungary. The European Council and the heads of state and government are in fact only authorized to decide on the money in the Cohesion Fund, while the European Commission is responsible for the reconstruction fund, the RFF, some of which was unblocked in December.

It is not clear from the FT article whether the proposal was put forward by the Council or by a Member State.

According to the plan's architects, the withdrawal of EU subsidies could put particular pressure on Hungary because, as they argue, " this would make financial markets and European and international companies less interested in investing in Hungary [...] and could quickly make financing the Hungarian budget deficit more expensive and weaken the forint's exchange rate".

Viktor Orbán has previously said that he would definitely veto aid to Ukraine. The European Union intends to provide €50 billion in a joint loan to Ukraine, which has only been able to finance most of its operations with the help of such foreign aid since Russia attacked it in February 2022.

We have contacted the European Council's press spokesperson for comment on the FT's information and will report back as soon as we receive a response.