EU Prepares First Ukraine Loan Payment as Hungary Blocks €90 Billion Deal

The European Commission is advancing technical and legal preparations to release the initial tranche of a €90 billion financial package to Ukraine as soon as Hungary withdraws its veto. The move is aimed at protecting Ukraine’s heavily strained wartime budget from severe fiscal pressure.

Hungarian Prime Minister Viktor Orbán has stalled the funding over a separate disagreement tied to the Druzhba oil pipeline. While Kyiv argues the pipeline infrastructure suffered significant damage from a Russian drone strike and requires urgent repairs, Budapest claims the shutdown is politically motivated ahead of the April 12 elections.

Within Brussels, officials anticipate that the veto may remain in place until after the election period. Orbán has made resistance to Ukraine a key part of his campaign strategy, even as he trails challenger Péter Magyar in opinion polls.

Commission Moves Ahead Despite Political Deadlock

Despite the ongoing impasse, the Commission is working to ensure that all mechanisms required to release funds are ready once the dispute is resolved. On Wednesday, it introduced the first of four essential legislative and technical documents that form the backbone of the assistance programme. The remaining documents are expected shortly.

For 2026, €45 billion has been earmarked, with €16.7 billion designated for financial assistance and €28.3 billion allocated to military support. Notably, drone-related expenditures will be exempt from the “Made in Europe” requirement, allowing Ukraine to source cost-effective components globally.

The remaining €45 billion is planned for 2027, although disbursements could extend beyond that timeframe if necessary.

“We will deliver on the €90 billion loan to Ukraine,” said Ursula von der Leyen. “We remain firmly committed to supporting the people of Ukraine and their fight for freedom.”

Legal Framework Near Completion

All four documents must be finalized before any funds can be released. The internal approval process is expected to proceed without difficulty, as Hungary, Slovakia, and the Czech Republic have secured opt-outs and will not participate in the vote.

However, a key regulatory amendment—required to enable joint borrowing for a non-EU country—remains blocked by Hungary. This regulation requires unanimous approval, making it the central obstacle.

The veto is widely viewed as a breach of the agreement reached by all 27 EU leaders, including Orbán, during a critical summit in December.

“We expect all member states to honour their commitments,” a Commission spokesperson stated. “Failure to do so would undermine the principle of loyal cooperation.”

Post-Election Scenarios

EU officials are evaluating possible developments following Hungary’s election.

If Péter Magyar secures victory, Brussels anticipates a swift resolution and removal of the veto. If Viktor Orbán retains power, he may either reconsider his stance or maintain opposition. Orbán has previously declared, “No oil, no money,” emphasizing his position on restoring Druzhba pipeline flows.

Should the veto be lifted, the Commission could release funds within days, as it already holds sufficient liquidity. The remaining requirement is formal legal authorization to transfer the funds to Kyiv.

“Once all elements are in place, we can immediately proceed with the disbursement,” the spokesperson confirmed.

Rising Financial Pressure on Ukraine

If the blockade continues beyond the elections, Ukraine could face serious financial challenges. At current expenditure rates, the country risks exhausting foreign assistance by mid-May, potentially forcing reductions in public services.

Additionally, Ukraine requires fresh funding to expand domestic production of weapons and drones.

President Volodymyr Zelenskyy warned that the delay has already hindered preparations for the upcoming winter season.

“As long as the blockage continues, the threat persists,” Zelenskyy stated, indirectly referencing Orbán. He suggested the obstruction serves external interests, adding that it appears aligned with Moscow.

Alternative Funding Options Under Discussion

Meanwhile, Kaja Kallas has raised the possibility of revisiting a previous proposal to utilize Russia’s frozen assets if the €90 billion loan remains stalled.

However, this approach—previously abandoned—faces significant legal, financial, and reputational complications, making it a challenging alternative.