Hungary has vetoed a €90 billion EU loan package for Ukraine, directly linking the decision to the suspension of oil flows through the Druzhba pipeline, a critical energy transit route. Hungarian Foreign Minister Peter Szijjarto stated the blockade will remain until oil transit to Hungary via the Soviet-era pipeline resumes. He accused Ukraine of “blackmailing” Hungary and breaching its EU commitments by halting the transit.
The Druzhba pipeline has historically transported Russian crude oil to Hungary and Slovakia via Ukraine. Operations through the conduit stopped in late January. Ukraine has attributed the halt to damage caused by Russia, an allegation Moscow denies. The dispute has prompted urgent calls from the European Commission for Ukraine to restore the flow, while Budapest and Brussels have both pressured Kiev over the issue.
The proposed EU assistance, intended for 2026-2027, was designed as interest-free support. It allocated €60 billion for military needs and €30 billion for general budget support. Unanimous approval from all 27 member states is required for the plan to proceed. Hungary had already indicated it would opt out of the scheme, which was to be funded through joint EU borrowing. The European Commission had previously warned that the borrowing plan could generate billions in annual interest costs for member states.
This veto emerges as Ukraine faces a severe fiscal crisis. Kiev projects a budget deficit of approximately $50 billion for the current year, with non-military expenditures—including salaries, pensions, and healthcare—entirely dependent on foreign aid. Reports suggest Ukraine could exhaust its funds by April without continued disbursements. The failed loan initiative was an alternative to an earlier, more ambitious proposal for a €140 billion “reparations loan” secured by frozen Russian assets, which collapsed due to a lack of consensus. Russia has warned it would treat any use of its frozen assets as theft and retaliate.
The Hungarian veto underscores the fragility of EU unity on Ukraine support, tying financial assistance to a specific energy infrastructure dispute. Resolving the Druzhba transit issue is now a prerequisite for unlocking a major tranche of future EU aid, highlighting how geopolitical and energy conflicts continue to complicate sustained backing for Kyiv. The next steps depend on negotiations to restart the pipeline and secure Hungarian consent for the loan.
