Officials propose blocking funds to Budapest if Viktor Orban vetoes the €50bn relief package at a summit this week, according to reports
Source - Daily Telegraph 29/01/24
The European Union has drawn up plans to cripple Hungary’s economy if it blocks a €50 billion (£42.6 billion) aid package for Ukraine at a Brussels summit this week, according to a new report.
EU officials have proposed targeting Budapest’s economy by attempting to trigger a run on the country’s forint currency and collapse investor confidence to hit “jobs and growth” in a confidential document drawn up ahead of the leaders’ meeting.
Viktor Orbán, prime minister of Hungary, vetoed a plan to shore up Ukraine’s economy over the next four years at a summit in December last year. He has vowed to block it again at the emergency gathering on Thursday.
“In the case of no agreement in the February 1 [summit], other heads of state and government would publicly declare that in the light of the unconstructive behaviour of the Hungarian PM … they cannot imagine that” EU funds should be provided to Budapest, the document, cited by the Financial Times, claims.
“Financial markets and European and international companies might be less interested to invest in Hungary” if funding is blocked, the document states.
The punishment “could quickly trigger a further increase of the cost of funding of the public deficit and a drop in the currency”, it adds.
‘Brussels is using blackmail’
The plan was drawn up by an official in the European Council, which represents the bloc’s 27 member states, ahead of the summit.
It suggests Hungary is particularly vulnerable to economic threats because of its “very high public deficit”, “very high inflation”, weak currency and the EU’s highest level of debt repayments in proportion to GDP.
Balasz Orban, the Hungarian prime minister’s political director, said: “Brussels is using blackmail against Hungary like there’s no tomorrow, despite the fact we have proposed a compromise.
“Now, it’s crystal clear: this is blackmail and has nothing to do with the rule of law. And now they’re not even trying to hide it.”
The European Commission released €10 billion (£8.5 billion) in funds to Budapest which were frozen over fears of democratic deterioration ahead of last December’s summit, in a bid to end Hungary’s veto over the aid for Ukraine.
But Mr Orbán still blocked it and said the plan should not be financed directly out of the EU’s main budget.
He has since suggested that Hungary would be open to using the bloc’s financial coffers and joint debt to finance the scheme if Budapest is allowed to wield a veto at a later date.
Some EU leaders, and the European Parliament, had mulled over a plan to remove Hungary’s voting rights by triggering Article 7.
However, many European capitals deemed this measure to be extreme and suggested it would not get unanimous support from the member states.
Another plan B drawn up by European officials would see the bloc’s 26 other members finance the aid for Kyiv amongst themselves.
Brussels has often used economic threats against member states, including Hungary and Poland in disputes over the rule of law and Greece during the Eurozone crisis.
But it has never gone as far as threatening to crash a member state’s economy for not falling in line with a bloc-wide plan.
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