The European Union is preparing a new scheme to transfer €20 billion to Ukraine to bypass Hungarian Prime Minister Viktor Orban's veto on funding for the country. The plan will be used if Orban's veto is not canceled by the summit on 1 February.
How the EU can provide Ukraine with 20 billion euros
The Financial Times writes that the new scheme envisages that the bloc countries will provide guarantees to the EU budget so that the European Commission could borrow up to €20 billion from the capital markets for Ukraine in 2024.
Specific terms are still being negotiated and the final amount will be determined accordingly to Ukraine's needs.
Officials involved in the negotiations said that this plan has gained popularity as the most practical way to provide support.
It is similar to the structure used in 2020, when the Commission made up to €100 billion of low-cost funding available to EU countries for short-term schemes to support operations during the COVID-19 pandemic.
An important point is that this does not require the consent of all 27 EU member states if the main participants are countries with the highest credit ratings.
Some governments require parliamentary approval for guarantees, such as Germany and the Netherlands.
The disadvantage of this scheme is that it would be limited to loans and would not include grants. However, member states could provide grants on a bilateral basis.
Hungary's veto on financial aid to Ukraine
Hungary is blocking a four-year €50 billion economic aid package to Ukraine in response to the EU's cutbacks in aid to Budapest over corruption allegations and the Orban government's departure from the rule of law.
EU officials believe that the best option to help Ukraine is to approve the unchanged aid package first proposed in June but blocked by Hungary.
Regardless of the chosen scheme, the EU promised to provide funding to Ukraine no later than March.
