Is EU support for Ukraine back on track?

Hungary’s Viktor Orban bows to EU pressure and agrees to a €50 billion support package for Ukraine, but this may not be enough to move the needle in the war.

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During an extraordinary summit in Brussels on 1 February, all 27 EU heads of state finally agreed a €50 billion (£43bn) support package for Ukraine through the Ukraine Facility, a new funding instrument. This is good news for Ukraine’s president, Volodymyr Zelenskyy, and his administration who desperately need this money to keep the Ukrainian state running and pay wages to staff. The show of unity is also good news for the EU. 

The show of unity is also good news for the EU. 

To be distributed over the next four years, the support package will consist of grants (€17 billion) and guaranteed loans (€33 billion). The financial grants will come from the revised 2021-27 European multiannual financial framework and should be approved by the European Parliament later this month. However, they could also be taken from the profits generated by immobilized Russian assets – which would be unprecedented. The new funds are also meant ‘to contribute to the recovery, reconstruction and modernization of the country’, according to the summit’s official conclusions, and to support Ukraine’s EU membership.

In addition to financial support, EU defence ministers agreed during a separate meeting to distribute at least a further €21 billion in military equipment to Ukraine in 2024, in addition to the €28 billion in military equipment sent since the start of Russia’s invasion in 2022. This is a significant increase from the previous two years. 

Overcoming Hungary’s obstruction

Opening accession negotiations with Ukraine was agreed at a European Council summit in December 2023 but Hungary’s prime minister, Viktor Orban, then vetoed the more imminent €50 billion support package. Since matters of foreign policy require a unanimous vote, Orban’s veto forced the 27 leaders to gather again for this February emergency follow-up summit to attempt to reach an agreement. 

This time, the Council succeeded. Viktor Orban did not receive support from his 26 counterparts, some of whom threatened to trigger a thus far unused provision of the Treaty on European Union (article 7), which takes away a member state’s voting rights. Talks just hours ahead of the summit, including with Italy’s prime minister, Georgia Meloni, helped convince Orban.

Orban’s threats are a way for him to negotiate directly with the EU’s big players about accessing the remaining €20 billion in EU funds – which his country desperately needs – that have been frozen for his infringements on the rule of law. According to France’s president, Emmanuel Macron, Orban got ‘clarifications’ from the Council that the EU funds can be released according to an ‘objective, fair, impartial and fact-based review’ of his reforms by the European Commission, referring back to the previous Council meeting conclusions.

To lift Orban’s veto, leaders also committed to hold an annual debate on the implementation of the financial support for Ukraine and to review in two years’ time, if needed, the financial instrument in the context of the next European multiannual budgetary framework. The €50 billion do not need to be evenly distributed over the four years.

Limits on the EU’s geopolitical ambitions

The agreement is also good news for the EU’s geopolitical ambitions. The unanimous agreement was critical for the bloc to show its unity just weeks ahead of the second anniversary of Russia’s full-scale invasion of Ukraine, for which a 13th package of European sanctions against Russia is underway. It also helps mask EU divisions over the Israel-Hamas conflict.

EU public opinion continues to show strong support for Ukraine. According to the latest Eurobarometer published in December 2023, support for a range of actions taken in response to Russia’s invasion of Ukraine remains very high: 72 per cent agree with providing financial support to Ukraine.

But while it succeeds in offering substantial macrofinancial assistance to Ukraine, the EU is struggling to meet its commitments in other areas. Due to widespread protests by European farmers (including outside the Brussels summit this week) the European Council agreed to introduce caps on zero-tariff imports of Ukrainian cereals, as well as on eggs and poultry, when they risk competing with EU producers. The bloc has facilitated trade routes for Ukrainian goods out of the Black Sea but has had to prevent these imports from distorting its own markets under pressure from Hungary.

A crucial year for Ukraine

While Ukraine has received substantial financial and military assistance from its allies and these most recent announcements are positive, much more is needed to move the needle after a summer where Ukraine’s counter-offensive has made little progress. Reports of Ukrainian forces having to ration artillery shells while being pounded by Russian shells underscore all the more clearly the EU’s likely failure to hit its target of sending 1 million artillery shells to Ukraine by 1 March 2024. 

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This year will be crucial for the course of the war. The European defence industry’s capacity to produce 155mm shells has increased by over 40 per cent since the beginning of the war, and the EU’s new ambition is to amend its original target and instead deliver 1.1 million shells by the end of 2024. But this may not be enough.

The EU support package sends a strong message to Washington, where new financial support for Ukraine still lacks backing from US Congress.

The EU support package sends a strong message to Washington, where new financial support for Ukraine still lacks backing from US Congress. ‘This decision will help those in the US who are determined to support Ukraine’, declared EU Commission president, Ursula von der Leyen, hoping the US will do its ‘fair share’. However, as Putin’s war economy may begin to deliver a tactical and strategic advantage for Russia, US support for Ukraine will be as crucial as European support. And it must come soon.