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European Union ambassadors approved on Wednesday the disbursement of a promised 90 billion euro ($144 billion Cdn) loan to Ukraine as well as a new package of sanctions against Russia, after Hungary lifted its veto, the bloc’s Cypriot presidency said.
The European Union’s 27 member states are now expected to sign off on the deal by Thursday afternoon, a spokesperson for the presidency added.
The EU agreed last year on the loan to keep Ukraine liquid through 2026 and 2027. But Hungary refused to sign off on the deal as Russia-friendly Prime Minister Viktor Orban accused Ukraine of sabotaging the transit of Russian oil through a pipeline damaged by Russian attacks.
The spat had also delayed the new sanctions against Russia, which the EU had initially aimed to adopt to mark the fourth anniversary of Russia’s full-scale invasion of Ukraine on Feb. 24, 2022.
The stumbling block was finally removed when Hungary’s oil group MOL said on Wednesday it had been informed that the Ukrainian operator of the Druzhba pipeline was ready to resume crude oil transit to Hungary and Slovakia.
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MOL said it expected the first shipments to arrive in Hungary and Slovakia by Thursday at the latest. Both countries remain reliant on Russia for much of their energy.
Ukraine’s prospects for receiving the loan had already improved when Orban lost Hungary’s parliamentary election on April 12. The leader of the winning party, Peter Magyar, has said he will no longer block the EU funds for Kyiv, though he is only expected to take power next month.
The idea of joint EU borrowing against the EU budget seemed initially impossible as it required unanimity and faced opposition from Orban.
Hungary, Slovakia and the Czech Republic agreed to let the scheme go ahead after EU leaders agreed it would not impact them financially.
The interest-free loan is to cover two-thirds of Ukraine’s needs for the next two years, estimated at 135 billion euros ($216 billion Cdn) in total.
Each year, 28 billion euros ($44 billion Cdn) will be for spending on military needs for Ukraine and 17 billion ($28 billion Cdn) on general budget needs.
Ukraine is not expected to pay the money back from its own funds, with the capital only due for repayment once Russia pays war reparations after the conflict is over.
Russia has central bank assets that are frozen in the EU which are worth around 210 billion euros ($351 billion Cdn) and which could be used for the repayment.
The scheme was designed to effectively make use of the frozen Russian funds to help Ukraine without confiscating the money, a step that had been rejected as legally risky.
Brussels expects other developed countries sympathetic to Ukraine to provide the rest of the funding, which has already been promised for 2026.
The morning after a dramatic election result, Hungarians are reacting to the end of Viktor Orbán’s 16 years in power. Questions remain about how the new government, led by Péter Magyar, will shake things up.
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