BRUSSELS — Hungary has formally ruled out the possibility of issuing Eurobonds to support Ukraine. The European Union is thus losing a potential backup plan in case it fails to find a way to use frozen Russian state assets to finance a €165 billion loan to Kyiv.
The European Commission wants all 27 EU Member States to agree at the December summit to support Ukraine's weakening economy through a loan based on frozen reserves of the Russian central bank. However, Belgium, which holds the largest share of these frozen funds, is strongly opposed to the plan, fearing that it would bear financial responsibility in the event of a lawsuit by the Kremlin.
Eurobonds would represent an alternative source of financing for Ukraine, but Budapest rejected the idea of joint debt covered by the EU's seven-year budget. According to two diplomats who were present at the ambassadors' meeting, the Hungarian side made its disagreement clear.
Hungary's rejection came just hours before German Chancellor Friedrich Merz's dinner with Belgian Prime Minister Bart De Wever in Brussels, where the Ukrainian loan was the topic of discussion.
Merz said he wanted to use the meeting to win De Wever over to the plan. „I take the concerns and objections of the Belgian Prime Minister very seriously.“ Merz told reporters on Thursday evening. „I don't want to persuade him, I want to convince him that the path we are proposing is the right one.“
Germany is offering a guarantee on 25 per cent of the loan amount to persuade Belgium to release the frozen billions to Ukraine. However, De Wever is demanding a broader guarantee from the entire European Union, which would insure Belgium for the entire amount, or even more.
The European Commission proposed Eurobonds on Wednesday as one of two options — alongside a loan backed by Russian assets — to ensure that Ukraine does not run out of funds as early as next April.
However, spending money through the EU budget requires unanimous agreement. Hungary's veto therefore raises the stakes in the expected tough negotiations on the loan ahead of the EU leaders' summit in Brussels on 18 December.
According to officials, given the strong opposition from the Belgian side, a quick breakthrough is not to be expected.
The Commission repeatedly downplays the financial and legal risks associated with the reparation loan and claims that its proposal addresses most of Belgium's concerns.
The proposed loan provides for €115 billion to be allocated to finance Ukraine's defence industry over five years, with a further €50 billion to cover Kiev's budgetary needs.
gnews.cz - GH
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