A senior EU official has denied a report that the bloc is considering cutting funding to Hungary if it vetoes a €50 billion aid package for Ukraine at Thursday’s EU Council summit.
Hungary’s Prime Minister Viktor Orban previously vetoed the same aid package last December, the only member state to object to the proposal.
The Ukraine aid package is part of the EU’s long-term budget until 2027, which requires a unanimous decision from all 27 member states.
Mr Orban is opposed to using the EU’s budget to allocate the €50 billion in economic support to Ukraine.
The statement by a senior EU official came in response to a story by The Financial Times.
The article stated that the EU was planning “to explicitly target Hungary’s economic weaknesses, imperil its currency and drive a collapse in investor confidence in a bid to hurt jobs and growth” in the event that Budapest blocked the Ukraine deal.
The newspaper said its reporters had been shown a document drawn up by EU officials outlining the plans.
Hungary’s currency, the Forint, dropped today to its lowest value in three months relative to the euro.
“The Hungarian economy is in bad shape. Fiscal deficit has been high since 2020,” said Dora Gyorffy, a professor of economics at the Corvinus University of Budapest.
“The immediate effect is scaring the markets. Only about 25% of Hungary’s debt is held in foreign currency and probably would not lead to an immediate collapse,” Dr Gyorffy told RTÉ News.
Relations between Mr Orban’s government and Brussels are tepid at best.
Since 2015, the Hungarian government has clashed regularly with EU institutions over migration policy, the rule-of-law and the rights of the country’s LGBTQ community.
In the capital Budapest, a government-sponsored poster campaign features the faces of European Commission President Ursula Von der Leyen and Alex Soros, the son of Hungarian-American entrepreneur George Soros.
In a nod to Mr Orban’s Fidesz party’s nationalist streak, the poster reads: “Let’s not dance to their tunes”.
Although the Hungarian government condemned Russia’s invasion of Ukraine, it has adopted a de facto neutral position towards the war, offering its support to broker a peace deal.
Hungary’s foreign minister Péter Szijjártó visited western Ukraine to meet his Ukrainian counterpart, Dmytro Kuleba, and re-iterated Budapest’s neutral stance on the conflict.
“Hungary is ready to host any kind of negotiations which aim at peace. And this offer is still valid whenever you take advantage of it to do,” said Mr Szijjártó.
Budapest has not offered any specific detail on how a peace deal can be achieved.
It was Mr Szijjártó’s first visit to Ukraine since the start of Russia’s invasion in February 2022.
During that same period, he has visited Russia on at least five occasions to discuss energy deals with Kremlin officials.
Hungary continues to import 80% of its natural gas needs from Russia, transported via pipelines in Bulgaria and Serbia.
Russia’s atomic agency, Rosatom, is also contracted to build Hungary’s only nuclear power plant.
Dr Gyorffy said that Hungary’s government had “made no effort to diversity its energy mix” since the start of the war.
At the weekend, Hungary’s minister for EU affairs János Bóka sent a new proposal to Brussels saying his government was open to a compromise provided Budapest could change its mind at a later date.
However, Mr Bóka critiscised the EU on X, in response to the story by The Financial Times.
“The document, drafted by Brussels bureaucrats, only confirms what the Hungarian Government has been saying for a long time: access to EU funds is used for political blackmailing by Brussels,” he wrote.
If a unanimous vote cannot be reached by all 27 EU leaders on Thursday, members states may have to resolve the matter by sending funding separately to Kyiv outside of the EU budget.
Additional reporting by Reuters