The European Union and Hungary are locked in a high-stakes standoff over financial aid to Ukraine, just days before a crucial EU summit that could determine the next phase of support for the war-torn country. At issue is an 18 billion euro aid package to Ukraine, which Hungary has vetoed over disputes about the bloc’s policies. However, a last-minute compromise remains possible.
EU Threatens to Cut Funding in Retaliation
According to leaked documents, the EU is threatening to cut billions in funding to Hungary in retaliation for its veto of financial aid to Ukraine . The aid package, worth 18 billion euros for 2023, is seen as vital support to keep Ukraine’s government functioning amid Russia’s invasion. Hungary is one of the few EU countries opposing the aid plan.
The EU is now drafting an unprecedented plan to bypass Hungary’s veto by qualified majority vote. This would enable the bloc to reduce vital cohesion funding to Hungary by up to 70% – jeopardizing projects key to economic growth. One EU diplomat stated “We have the means to bring Orbán to his knees if we wish.” However, Hungary has accused the EU of “blackmail” and refuses to give in .
| Change in EU Cohesion Funds to Hungary Under Proposal |
| Overall Funding Cut | Up to 70% |
| Transport Infrastructure | Cut by 57% |
| Environmental Projects | Cut by 53% |
| Competitiveness Funding | Cut by 100% |
Hungary Signals Possible Compromise
However, in the past days Hungary has softened its stance and indicated a willingness to compromise. Senior officials stated Hungary may be open to using the EU budget for aid instead of launching joint borrowing . Hungary is also ready to release blocked EU funds to Ukraine if security concerns are addressed .
“Hungary is seeking solutions, we have to find common ground…we are open to using EU budget reserves,” said Orbán advisor Balázs Orbán .
EU Summit on Jan. 30th Could Force Decision
These developments come just ahead of a pivotal Jan. 30th EU summit where member states were expected to approve financing Ukraine’s immediate needs through joint borrowing. However, unanimity is required on financial matters and Hungary’s veto has put the aid package in limbo .
Now the summit could become an “EU Armageddon” if member states override Hungary’s veto under Article 7 procedures . Invoking Article 7 would symbolically suspend certain rights, like Hungary’s vote on financial matters.
While the EU could bypass Hungary’s veto this way, member states are wary of such a drastic step against an existing government. Europe’s unity is being tested by this showdown with Orbán. As one senior EU diplomat warned, “We might win the battle but lose the war.” 
What’s Next: No Clear Path Forward
Just days before the critical EU summit, a path forward remains unclear. The European Commission says it will not trigger the “nuclear option” against Hungary until there is a clear majority supporting sanctions . But member states are also considering alternatives like a separate intergovernmental agreement on aid without Hungary.
While last-minute compromises behind closed doors are still possible, positions appear entrenched on both sides. If EU leaders fail to break the deadlock, it could undermine Europe’s united support for Ukraine at a critical time. Russia would emerge as a prime beneficiary from bitter EU infighting.
Diplomats warn the damage from a public internal clash could be severe. As one EU diplomat starkly concluded, “Leaders have to understand that Sunday’s summit risks becoming an existential moment for the EU.” 
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