Exclusive-EU budget chief sees deal on 50 billion euros for Ukraine, has plan B

European Commissioner for Budget and Administration Johannes Hahn attends a news conference on a plan to provide regular financial support to Ukraine, in Brussels, Belgium, November 9, 2022. REUTERS/Yves Herman/File Photo reuters_tickers

By Jan Strupczewski

BRUSSELS (Reuters) – European Union leaders are likely to reach a deal on 50 billion euros ($54 billion) for Ukraine this week because it is to come in a package with other cash that Hungary, which threatened to block it, will benefit from, EU Budget Commissioner Johannes Hahn said.

The EU wants to revise its budget until 2027 to add 33 billion euros in loans and 17 billion in grants for Kyiv so that Ukraine, which is fighting off a Russian invasion, has certainty of financing to keep the state running.

Hungary, whose Prime Minister Viktor Orban has touted his ties with Moscow, has questioned the amount and its placement in the EU budget, on which all 27 EU governments, including Budapest, must unanimously agree.

An EU agreement is all the more important because new financial aid to Ukraine from the United States has become a bargaining chip in domestic politics, throwing doubt over whether Kyiv will get any more money from Washington.

“We have been asked in spring by the American government that they would be very much in favour if we could be spearheading the long-term support for Ukraine also as a kind of domestic pressure on the House of Representatives and the Senate to do something similar,” EU Budget Commissioner Johannes Hahn told Reuters in an exclusive interview.

“This is all well understood by all the leaders and that’s why I think in the end, also Hungary will agree, because it’s also about their own interests,” Hahn said on the eve of a EU leaders summit in Brussels to discuss the issue.

Hungary has been keen on more EU funds to protect its borders from illegal migrants and pay third countries to keep migrants from crossing into Europe. The EU budget review, apart from the 50 billion for Ukraine, also has an additional 15 billion euros for such polices.

“It is a package, it’s not only for Ukraine, there is something in it for migration, border protection, support of countries like Turkey, nowadays good friends of Hungary and vice versa, to get also additional financial means,” Hahn said.

To further sweeten the deal, the Commission decided on Wednesday to unblock Hungary’s access to 10 billion euros of EU cohesion funds that were frozen because of EU concerns that Hungary did not respect the rule of law. Hungary’s parliament passed laws on Tuesday to improve the independence of courts.

Asked if the EU had an alternative plan to provide Ukraine with the cash even if Hungary blocks the use of the common EU budget, Hahn said:

“One of the qualities of the Commission is always to have a Plan B, but honestly I don’t want to speak about and speculate about Plan Bs because this also creates an exit opportunity.”

Asked if 26 EU countries except Hungary could provide the money through an intergovernmental agreement, Hahn said:

“Of course. It is one of the possibilities. But I don’t believe that Hungary would stay out of the international, not only European, but international community.”

($1 = 0.9269 euro)

(Reporting by Jan Strupczewski)