Kawundo.com
Hungarian Prime Minister Viktor Orbán is preparing to serve up a major policy gift for his best friend across the Atlantic, former United States President Donald Trump.
He’s concocted a way to let Trump, if he successfully makes it to the White House for a second term come November, wriggle out of a $50 billion loan the U.S., the European Union and leaders of the G7 offered to Ukraine to back its fight for survival against Russia. That would let Trump off the hook, allowing him to tell Republican voters that, if elected, he won’t give Ukraine another cent.
Hungary says it won’t consent to a change in rules that would allow Washington to play a major role in the loan until after the U.S. election.
The loan would be repaid entirely using the windfall profits generated by over $250 billion of Russian assets that were immobilized across Western countries after Vladimir Putin’s invasion of Ukraine in February 2022. Europe has more skin in the game as it holds most of the funds.
And timing is everything. Washington insists that the EU needs to extend the sanctions renewal timeframe to at least 36 months. Under current rules, the EU’s sanctions come up for renewal every six months, which increases the likelihood of a single country unfreezing the assets — which would force national governments to tap into taxpayers’ money to repay the loan.
While every other leader is in favor of extending the sanctions rollover period to 36 months as requested by the U.S., Orbán refuses. According to the EU’s own rules, all 27 member countries need to approve any changes to the sanctions rules.
Ukraine urgently needs fresh funding from its Western allies to keep its state running and prepare for what is expected to be a brutal winter as Russia targets the war-torn country’s energy infrastructure.
And now, thanks to Orbán, the U.S. is unlikely to participate substantially. Still, Europe is likely to go ahead anyway.
“If we don’t work this out [by extending the sanctions duration] it will cost the EU — including Hungary — more money,” said one EU diplomat, who, like others quoted, was granted anonymity to speak openly about the matter.
Costs for European countries — including Hungary — would be higher than if the U.S. was on board.
However, for Orbán that’s a small price to pay. The upside for him is that he would be buying much-needed goodwill from his Republican friend.
“They [Hungary] don’t care if Europe has to pay more. It’s about helping Trump,” said a second EU diplomat.
If Brussels and Washington jointly underwrite the €35 billion loan, a reelected Trump would be tied to servicing it for years. But if the loan is approved without the U.S., he would have no such obligation.
Orbán’s blocking of the loan is the latest example of alignment between Trump and the Hungarian prime minister, who met as recently as July at Mar-a-Lago.
Speaking to journalists in Brussels, Orbán said he would be popping “several bottles of champagne” if Trump prevails over Kamala Harris in November.
The two already appear to be marching in lockstep when it comes to Ukraine.
Orbán digs in
What seems like a technical quibble is a critical consideration for Washington — and could be enough to break transatlantic unity on Ukraine support, at least on the financial front.
As Orbán threatens to use his veto in Brussels, the U.S. signaled that it is considering participating in the loan — albeit with a significantly lower amount — even if the EU cannot prolong its sanctions period, a third EU diplomat and a European Commission official said.
One of the options involves Washington contributing $5 billion, which roughly equals the amount of Russian assets that it holds domestically — and would still leave Europe footing the lion’s share of the bill.
The Commission official believes that the U.S. does not want to arrive “empty-handed” at a meeting of G7 finance ministers in Washington at the end of October that will likely decide the fine print of the $50 billion loan.
Perhaps more significantly, Japan recently signaled that it might pull out of the loan if the U.S. does not take part.
For the time being, all eyes are on the summit of EU leaders in Brussels this week.
If Hungary refuses to budge on the sanctions duration, the EU is likely to finalize the loan on its own terms because its budget rules make it much easier to get the payment approved by national capitals before year-end.
The EU is fast-tracking legislation to pay up to €35 billion to Ukraine, which covers the U.S. share of the loan and is set to be finalized by the end of October.
But penny-pinching governments in the EU are reluctant to increase their contribution to cover the shortfall from the U.S.
“We are putting pressure, but so far Orbán is not caving,” said the first EU diplomat.
The diplomat added: “It’s just a game of chicken.”
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