The Hungarian government today vetoed EU aid to Ukraine in the Council of Economic and Finance Ministers. The veto is apparently related to the threatened freezing of Hungarian EU funds. The blockade of Ukraine aid seems to be aimed at preventing a qualified majority in the Council for the Commission’s proposal under the rule of law conditionality mechanism.

Daniel Freund, negotiator for the Greens on the Rule of Law Conditionality Mechanism in the European Parliament’s Committee on Budgetary Control, comments:

“Viktor Orban is abusing the veto like no one before him. He is only concerned with preserving his own corruption. He even takes funds for Ukrainian hospitals hostage for this. He is escalating the situation completely. The EU will find ways to support Ukraine even without Hungary. But that means: more time, more effort, more costs. Viktor Orban could not have given Putin a nicer present today.”

What happens next with the rule of law conditionality mechanism

With the veto on aid to Ukraine, it is more likely that the current dispute will end up on the agenda of the European Council meeting on 15-16 December as a whole package consisting of the rule of law conditionality mechanism, the recovery fund and the Hungarian double veto on Ukraine aid and the global minimum tax. At the heart of the matter is the fact that Hungary is threatened with the freezing of around 13.3 billion euros from the recovery fund (5.8 billion) and the EU budget (7.5 billion) due to rule of law violations. The EU Commission had proposed to the Member States to freeze both pots and initiate a first disbursement only if a total of 27 milestones have been met by the Hungarian government. Previous reform measures in Budapest were considered insufficient. Both would require a qualified majority in the Council.

Showdown at the summit: Why this is dangerous

If the current dispute is not settled before the European Council, a package deal could be agreed that would turn out to Orban’s advantage. As is customary in the body of heads of state and government, Hungarian vetoes could be dissolved by removing the threat of financial sanctions. Viktor Orban could sell his veto here against the release of funds from the EU budget. The rule of law conditionality mechanism would become de facto useless. Similar horse-trading on the rule of law had already taken place in December 2020. At the EU summit at that time, Poland and Hungary had blocked the EU budget with a veto and only gave it up when the rule of law conditionality mechanism was put on ice for two years.

The EU is in the driver’s seat: the recovery fund

Viktor Orban, however, cannot use his veto to its full extent in the current situation. The 26 remaining EU Member States could also launch the aid package for Ukraine outside the EU. This is more expensive and more time-consuming – but possible. Moreover, Viktor Orban needs a qualified majority of Member States to access the recovery fund. The Hungarian plan for this has already been approved by the EU Commission – but it must still be confirmed by the Member States before the end of the year. If Orban continues to oppose the rest of the European Union, he risks losing 4.1 billion euros irrevocably.