Veto Verdict: Orbán's EU Standoff Over Ukraine Funding
Hungarian Prime Minister Viktor Orbán is most certainly the European Union’s (EU) chief internal antagonist. Over the course of his tenure as Hungarian Prime minister since 2010, the long-time leader of the right-wing populist party Fidesz has consistently sparred with the EU over his internal style of rule, with over €30n of regular EU aid to Hungary frozen on a variety of different grounds, including €6.3bn due to Brussels seeking to protect EU funds from graft and corruption within Hungary, and €5.4bn over the country’s treatment of asylum seekers, a controversial anti-LGBT+ law, and concerns over academic freedom. The conflict is not entirely about internal Hungarian politics, however, as Orbán has consistently sought to push his agenda within the EU’s internal boundaries, stating that ‘our plan is not to leave the EU… our plan is to conquer it.’ This bold assertion of Hungary's interests within the bloc underscores Orbán’s firm commitment to what many perceive as a Eurosceptic agenda.
Indeed, Orbán and Brussels have come into a distinct conflict over the Russo-Ukrainian War, exemplified by his reluctance to ratify Sweden's entry into NATO that has only just been resolved after much consternation, and more notably, Orbán’s threatened veto of a crucial 4 year, €50bn EU aid package for Ukraine, alongside discussions about its membership to the EU. Such actions have drawn major criticism from within the EU, particularly from EU Commission President Ursula von der Leyen, as Ukraine currently faces distinct financial challenges during the war. Indeed, Ukraine’s heavy reliance on tax revenues for defence spending coupled with pressing needs for government expenditures and public services paints a bleak picture of its fiscal sustainability as the war continues to rumble on into 2024. Without timely financial assistance, Ukraine risks resorting to precarious measures such as monetary financing by the central bank, potentially leading to hyperinflation or exacerbating financial instability, and with it, almost certain defeat.
Despite efforts by Ukrainian President Volodymyr Zelenskyy and other EU capitals to sway Hungary, Orbán insisted on blocking the €50 billion aid package and postponing talks on Ukraine's EU membership until after the European Parliament elections in June. Orbán's government further argues that any aid to Ukraine should not come from the EU's joint budget and proposes a separate assistance mechanism led by member states with a shorter planning period.
In response, a variety of options were explored by the EU, including freezing further EU funding to Budapest, and exploiting Hungary's economic weaknesses, such as its high inflation and debt costs, to pressure the Hungarian government into compliance. The repercussions of this standoff were evident in Hungarian markets, as the country's currency experienced distinct economic fluctuations amid the uncertainty surrounding EU-Hungary relations during this stand-off. Moreover, the Hungarian National Bank continues to constrain its efforts to stabilize the economy, inviting potential implications for monetary policy decisions and the overall economic outlook thanks to Brussels’s actions.
Eventually, the deal was passed at the last minute, with Orbán choosing to rescind his veto, even as his demand for an annual veto over payments to Ukraine was ultimately rejected by the other 26 EU leaders. However, as a concession, the agreement acknowledges a 2020 EU commitment to treat all member states equally regarding fund allocation, a move seen as a face-saving measure for Orbán. Furthermore, in the wake of the deal passing, over €10bn of Hungary’s EU funds, frozen over the country's failure to address persistent rule-of-law concerns, has been released by the EU.
One can consider this saga as another manifestation of Orbán's strategic manoeuvres, as the Hungarian leader has adeptly used his veto power to extract concessions from Brussels. Such actions highlight his adept negotiation skills and his willingness to challenge EU norms and institutions to advance Hungary's interests. However, these confrontative tactics within the bloc are not without consequence, as they have continued to strain relations with EU leaders and further raised concerns about unfreezing funds. Orbán has not shown a willingness to stop the continued erosion of democratic norms and the rule of law within Hungary, nor to repeal many of his socially conservative policies. As such, even as some funds are planned to be unfrozen, Orbán’s tactics may be unlikely to bring about further boons for Budapest in the near future.
Ultimately, Orbán's actions reflect a complex interplay of domestic power dynamics, geopolitical calculations, and ideological convictions. While he portrays himself as a defender of Hungarian sovereignty against perceived external threats, his confrontational approach risks isolating Hungary within the EU and exacerbating tensions with key allies. As Brussels seeks to uphold the rule of law and democratic principles within the bloc, Orbán's continued defiance poses significant challenges for EU unity and the future of Hungary's relationship with the European project. Indeed, despite facing mounting pressure from EU counterparts, Orbán remains steadfast in his positions, buoyed by what he perceives as shifting political tides both within Europe and across the Atlantic. His belief in the rise of right-wing politics, both in Europe and potentially with a return of Donald Trump to the White House in the United States, emboldens his conviction that the EU will eventually align with his nationalist, anti-immigration stance. Perhaps more importantly is the future of Ukraine within the EU with Orbán in power in Hungary, as his actions threaten any possibilities for its accession to the EU. Even as Hungary has taken steps to allow for Sweden to take the steps needed to join NATO, other conflicts within Europe are bound to occur with Orbán at their centre.
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The views and opinions expressed in this article are those of the author and do not necessarily reflect those of the wider St. Andrews Foreign Affairs Review team.
