EU Prepares Contingency Plan for €20 Billion Aid to Ukraine, Bypassing Hungary's Veto

The European Union is preparing a contingency plan worth up to €20 billion for Ukraine that does not require Hungary's consent, The Financial Times reports.

The preparation of an alternative to the main plan was known long before the December summit of EU leaders.

According to the newspaper's informed sources, at this stage, they are considering the option of the participating countries issuing guarantees for the EU budget, which would allow the European Commission to borrow up to €20 billion next year to support Ukraine in the capital markets.

Specific conditions are still being negotiated, and the final amount will be determined based on Ukraine's needs.

This "Plan B" is similar to the scheme that was used in 2020 to support the economy in the wake of the coronavirus pandemic.

It will not require the participation of all member states, as long as the key contributors are countries with the highest credit ratings.

In some countries, such as Germany and the Netherlands, parliamentary approval will be required to issue national guarantees. If Orban still blocks the main plan after the additional summit on 1 February, these approval processes are hoped to be completed quickly enough for Ukraine to start receiving money in March.

The disadvantage of "plan B" is that it includes only loans, not grants. However, member states can decide on a bilateral basis to provide non-repayable assistance.

Another fallback option being discussed is to extend the funding scheme, under which the EU has already provided €18 billion in profitable loans to Ukraine, for a few more months or even a year. This would require the consent of most countries.

However, at this stage, most European officials are in favour of agreeing on the basic 50 billion plan that Viktor Orban has blocked.

This additional, package decision on the EU budget covers not only assistance to Ukraine for 4 years, but also includes €4 billion for other priorities, including investments in defence and migration measures.

After the December EU summit, many leaders expressed confidence that the EU would definitely make a decision on financial support for Ukraine at the beginning of the year.

Earlier, the European Commission proposed to provide financial support to Ukraine in the amount of €50 billion by 2027, of which €33 billion will be provided in the form of loans and €17 million in grants.