For the sake of helping Ukraine, the EU broke the resistance of Hungary

For the sake of helping Ukraine, the EU broke the resistance of Hungary



Brussels made a deal with Budapest

The EU broke the Hungarian resistance and approved a plan to help Ukraine for 18 billion euros. On Monday, European Union governments struck an agreement with Hungary that allocates financial aid to Kiev in 2023 and receives Budapest's approval for a global minimum corporate tax, all in exchange for EU flexibility on the funds paid to Hungary.

The tricky deal comes after months of wrangling between EU institutions, EU member states and Hungary and was laid out on Monday by a council representing E member governments. This means Ukraine will receive 18 billion euros from the EU budget next year, writes The Guardian.

Budapest vetoed payments in this stable, predictable and cheaper way, not the bilateral loans that member countries provided to Kyiv.

Hungary also agreed to drop its veto on the OECD-agreed global minimum corporate tax of 15%, which would apply to large international corporations where they make money, not where they set up offices for tax purposes.

In exchange for Budapest's agreement, the EU will approve Hungary's plan to spend 5.8 billion euros in EU recovery funds, though the money won't come until Budapest meets a host of conditions, Reuters said. The EU approval was crucial because if the spending plan had not been approved by the end of the year, Budapest would have lost 70% of the total amount irrevocably.

The EU governments also agreed to cut to 6.3 billion euros from 7.5 billion euros the amount of EU funds for Hungary, which the European Commission wanted to freeze due to Budapest's lack of respect for the independence of the judiciary and high-level corruption.

As Reuters highlights, 6.3 billion euros represent 55% of the EU funds that Hungary must receive from the EU budget until 2027 in order to reduce the difference in living standards with the wealthier members of the bloc from 27 countries. The European Commission wanted to freeze 65% of the money.

“The deal is reached: Hungary lifts its veto on the global minimum corporate tax and on 18 billion euros for Ukraine, and the percentage of the frozen cohesion funds will be reduced to 55% of the total, and its recovery plan will be approved,” said one of the EU diplomats.

The total EU funds account for over 8% of Hungary's GDP in 2022.

Hungarian Prime Minister Viktor Orbán is in need of resources for his ailing economy, given a rise in inflation to 26%, a sharp increase in public debt and a noticeable lag of the forint currency against regional peers.

In recent months, Orbán has been keen to strike a deal with the EU and has changed domestic legislation to address long-standing European Commission concerns about corruption. Brussels, however, was not convinced, while other countries were outraged by Orban's veto on a common EU foreign policy.

“It is important for us to be able to support Ukraine. The rest depends on Hungary, it's their money,” said one of the EU diplomats.

In his more than a decade in office, Orban has had many clashes with the EU over what European officials in Brussels say he was damaging liberal democracy in Hungary by restricting the rights of the media, scientists, judges, NGOs, migrants and sex workers. -minorities.



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