There is no option other than a settlement of the dispute between Hungary and Ukraine over the supply of Russian oil via the Druzhba pipeline to unblock the adoption of the European Union’s €90 billion loan to Ukraine for 2026 and 2027 (see EUROPE 13820/15).
However, “we’ll deliver on this loan one way or another”, assured the European Commissioner for the Economy, Valdis Dombrovskis, on Tuesday 10 March, at the end of the Ecofin Council. Expecting that “all political leaders will honour their commitment” made at the European Council at the end of 2025, he noted that the EU had already faced such a blockage and had always found a solution.
On Tuesday, during the debate between European finance ministers, several countries “pointed the finger” at Hungary and criticised its lack of loyal cooperation, according to a European source, even though Budapest will not be affected by the financing of the future loan to Ukraine in the same way as Slovakia and the Czech Republic.
According to this source, the possibility of Member States providing national budget guarantees has not been raised. The Lithuanian minister, Kristupas Vaitiekūnas, has advocated resuming work on mobilising the frozen assets of the Bank of Russia, even though the EU27 ruled out this option last December (see EUROPE 13776/1). Cautious, France is said to have advised against embarking on excessively ‘creative’ legal avenues.
In the meantime, the Commission and the Ukrainian authorities are drawing up the financing strategy and the Memorandum of Understanding (MoU), two documents needed to implement the future loan.
Mr Dombrovskis refused to say when Ukraine might default if it did not receive external financial support. “There is no strict deadline”, he stressed, welcoming the fact that the IMF had reached an agreement with Ukraine on new macro-financial aid.
Until now, the stated objective has been to enable the first payments to be made to Kyiv at the beginning of April.
Druzhba pipeline. With his political survival at stake in the parliamentary elections on Sunday 12 April, Hungarian Prime Minister Viktor Orbán is campaigning against ‘Brussels’ and its alleged desire to prolong the war by helping Ukraine.
As long as Russian oil is not delivered to his country via the Druzhba pipeline, which crosses Ukraine, he will block the adoption, which requires the unanimity of the Member States, of the revision of the current Multiannual Financial Framework (MFF) in order to authorise the European Commission to borrow on the markets to finance the loan to Ukraine.
Following a meeting in Paris with the President of the Commission, Slovak Prime Minister Robert Fico said in a statement to the press that he had shown Ursula von der Leyen “satellite images confirming that the Druzhba pipeline on the territory of Ukraine is not damaged”. He accused the Ukrainian President of taking a “deliberate unilateral decision” to halt the flow of Russian oil to Hungary and Slovakia, two countries which had negotiated an exception to the EU embargo on these hydrocarbons.
“We agree that the Druzhba pipeline must be restored and, if it is damaged - and we maintain that it is not - it must be repaired”, added Mr Fico. He welcomed Ms von der Leyen’s proposal to finance any repair project.
This tug-of-war will continue until the European Council meeting on Thursday 19 March and, potentially, until the Hungarian elections.
Budgetary repercussions for Russia. Asked about the US decision to temporarily ease sanctions against countries buying Russian oil, Mr Dombrovskis said that the EU’s strategy was to keep up the pressure to weaken the Russian economy.
He acknowledged that the impact on energy markets of the Israeli-American attacks on Iran was likely to increase “Russia’s budgetary fallout”. Hence the importance, in his view, of “strictly” applying the G7 countries’ tariff cap on Russian oil exports and the EU sanctions targeting the Russian energy sector.
“The opposite would be self-defeating as it would reinforce Russia’s capacity to wage war, undermining Ukraine”, said the European Commissioner, pointing out that Russia provides assistance to Iran.
Irish Finance Minister Simon Harris described the idea that Russia is benefiting financially from the war in the Middle East as “utterly despicable”.
Speaking to EU ambassadors in Brussels, the President of the European Council, António Costa, said that Moscow was “the only winner” in the Israeli-US attacks, which flout international law, provide new resources for the Kremlin and divert military capabilities from Ukraine (see other news). (Original version in French by Mathieu Bion with Pauline Denys)