Hungary Blocks €35 Billion EU Loan to Ukraine Until After US Elections

Hungary has announced that it will postpone the final decision on a €35 billion EU loan for Ukraine until after the US presidential elections scheduled for November 5, 2024. The announcement was made by Hungary’s Finance Minister, Mihály Varga, during a press conference following a ministerial meeting in Luxembourg.

According to Euronews, Varga stated that the question of extending European Union sanctions against Russia should be resolved post-elections, emphasizing the need to assess the direction of the incoming US administration. “We believe that this issue should be decided— the prolongation of Russian sanctions—after the US elections,” he explained.

The proposed loan, which was agreed upon by G7 leaders in June, is part of strategy to support Ukraine’s war-impacted economy using proceeds from frozen Russian assets, estimated at approximately €300 billion. The EU aims to provide up to €35 billion of this amount, with additional contributions expected from the US and other G7 countries to bring the total to about €45 billion.

The US has raised concerns regarding the stability of this plan, as the EU’s sanctions on the frozen assets require renewal every six months by unanimous agreement among member states. This leaves the initiative vulnerable, as any single member state can block the renewal and unfreeze the assets, jeopardizing the entire financial support framework.

To address these concerns, the European Commission has proposed extending the renewal period for the sanctions from six months to three years, a measure that requires unanimous approval. While many EU member states support swift action on the credit to Ukraine, Hungary appears reluctant to proceed until after the US elections. Varga indicated that the contrasting approaches of the two leading presidential candidates, Kamala Harris and Donald Trump, would influence Hungary’s stance on sanctions and support for Ukraine.

During the meeting, European Commissioner Paolo Gentiloni acknowledged that there was widespread support among ministers for amending the sanctions regime, which is considered essential for facilitating American participation in the funding plan.

The discussion regarding the loan will continue during an upcoming meeting of EU ambassadors in Brussels. Hungary currently holds the rotating presidency of the EU Council, giving it a pivotal role in moderating these discussions.