Mon, 11 Dec 2023

EU prepared to give in to Hungarian demands FT
04 Oct 2023, 00:13 GMT+10

Viktor Orban had previously vowed to block any increase in the EU budget, jeopardizing the bloc's financial aid to Kiev

The European Commission is expected to unfreeze about €13 billion ($13.6 billion) in EU funds for Hungary by the end of November, aiming to secure the country's support for an increase to the bloc's budget and massive financial assistance to Kiev, according to three officials briefed on the discussions cited by Financial Times.

In December, Brussels froze €22 billion ($23 billion) in cohesion funds allocated to Hungary. The money was blocked over major concerns related to the independence of judges and the country's failure to comply with the EU Charter of Fundamental Rights on issues including LGBTQ rights, academic freedom, and asylum.

The funds were supposed to be frozen until Budapest complies with rules protecting human rights and the rule of law. In May, the Hungarian government reached a preliminary deal on key judicial reforms. As a result, Brussels agreed to release more than half of the amount.

By unblocking the funds, EU authorities expect to gain Hungarian support for boosting the bloc's budget and providing significant financial aid to Ukraine.

The commission had previously proposed a €66 billion increase to the EU's shared budget to cover increased costs, part of which are expected to contribute to a €50 billion financial package for Kiev to help in covering the country's expenses for the next four years.

Since the beginning of the Russian military operation in Ukraine, Hungarian Prime Minister Viktor Orban's line of argument has been broadly different from that of the EU and its allies. The PM has repeatedly criticized sanctions against Russia and refused to send weapons to Ukraine. Orban also urged the EU to persuade Moscow and Kiev to begin peace negotiations.

In retaliation, the Ukrainian National Corruption Prevention Agency (NCPA) designated Hungary's largest commercial lender OTP Bank an "international sponsor of war" over allegedly providing preferential lending terms to the Russian military.

Budapest responded by blocking the release of funding totaling €500 million earmarked for military aid to Ukraine by means of the European Peace Facility (EPF) mechanism.

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