EU agrees €50bn support package for Ukraine

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The EU has agreed a deal on a €50bn financial support package for Ukraine after Hungarian Prime Minister Viktor Orbán caved to pressure from his fellow leaders and rescinded his veto on the aid.

The compromise, reached at the start of an emergency EU summit, came after an unprecedented campaign of pressure on Orbán, the bloc’s most pro-Russian member.

“We have a deal,” Charles Michel, president of the European Council, said on X. “All 27 leaders agreed.”

Officials had warned of an irreparable rupture within the bloc if the Hungarian leader maintained his veto on the €50bn package, which Kyiv says is critical for its financial stability following Russia’s full-scale invasion in 2022.

The Hungarian leader’s refusal to budge in recent weeks has led the bloc to test different approaches, from offering financial incentives to exploring the economic consequences of a complete cut-off from EU funding.

It also prompted discussions among some capitals about the possibility of stripping Budapest of its voting rights.

Michel said that Thursday’s compromise “locks in steadfast, long-term, predictable funding for Ukraine”.

The agreement includes a provision for EU leaders to hold an annual debate on the implementation of the aid package and the possibility for a review in two years, if all member states agree.

“The stakes were really high for us if we had lost this,” said one senior EU official. “A really dark path.”

Orbán said that he accepted the offer after negotiating a “control mechanism, which guarantees a rational use of the monies”.

“I am glad that the reaction of markets and players of the economy is already positive on this agreement,” he added.

The European parliament must now sign off on the increase to the EU’s budget that includes the €50bn for Ukraine. The vote is set to take place at the end of February, which means the earliest the money can start flowing to Ukraine is in March, EU officials said.

The compromise was drawn up in talks on Thursday morning between Orbán, Michel, European Commission president Ursula von der Leyen and the bloc’s three most powerful leaders: German Chancellor Olaf Scholz, French President Emmanuel Macron and Italian Prime Minister Giorgia Meloni.

That deal was then brought to the bloc’s other 23 leaders, who gave their assent, according to people involved in the talks.

“Orbán came to his senses,” said one EU diplomat briefed on the negotiations.

The EU aid package, which will fund Kyiv over four years, is critical to keeping Ukraine’s economy afloat as the Biden administration has failed to win Congressional support for its own $60bn support package. Ukrainian officials have warned of a potential budget crisis if western aid is stopped altogether.

“Continued EU financial support for Ukraine will strengthen long-term economic and financial stability, which is no less important than military assistance and sanctions pressure on Russia,” Volodymyr Zelenskyy, Ukraine’s president, said in a post on X in response to the deal.

Orbán had previously vowed not to agree to the funding unless the EU gave him an annual veto over continued payments to Kyiv.

His demand had been ruled out by the other 26 leaders, some of whom suggested that political or economic pressure could coerce him into changing his position.

At the Hungarian leader’s request, the agreement also refers to a 2020 deal in which the EU said it would treat all member states equally when determining whether to withhold EU funds.

At present, more than €20bn of EU funds earmarked for Hungary are frozen due to concerns over the rule of law and other issues.

“It’s a face-saver,” said the senior EU official of the reference to the 2020 deal. “He calculated where the pressure points are . . . and responded accordingly.”

Additional reporting by Roman Olearchyk in Kyiv and Andy Bounds and Javier Espinoza in Brussels.