Hungary waives veto and EU takes major step toward approving mega-loan to Ukraine and new sanctions against Russia
Hungary no longer blocks decisions regarding Ukraine, under the conditions that the transit of Russian oil through the Drujba pipeline will be resumed, a condition of Prime Minister Viktor Orban, writes Reuters.
EU ambassadors on Wednesday approved a 90 billion euro loan promised to Ukraine as well as a new package of sanctions against Russia after Hungary lifted its veto, the bloc's Cypriot presidency said.
However, the 27 member states of the European Union still have to formally approve the agreement by Thursday afternoon, added a spokesman for the Cypriot presidency.
The payment of the 90 billion euro loan promised by the EU to Ukraine can take place within 24 hours if Hungary does not express its objections in writing, a German government spokesman said on Wednesday.
Obstacle removed
The EU reached an agreement on this loan last year. But Hungary later refused to approve the deal, with Prime Minister Viktor Orban accusing Ukraine of sabotaging the transit of Russian oil through the Drujba pipeline, which Kiev said had been damaged by Russian attacks.
The dispute has also delayed new sanctions against Russia, which the EU originally intended to introduce to mark the fourth anniversary of Russia's large-scale invasion on February 24, 2022.
The obstacle was finally cleared, with Hungarian oil group MOL announcing on Wednesday that it had been informed that the Ukrainian operator of the Drujba pipeline was ready to resume the transit of crude oil to Hungary and Slovakia.
MOL said it expects the first pipeline shipments to reach Hungary and Slovakia by Thursday at the latest. Both countries remain dependent on Russia for much of their energy.
Ukraine's prospects for receiving the loan had already improved when Orban lost Hungary's parliamentary election on April 12. The leader of the winning party, Peter Magyar, said he would no longer block EU funds destined for Kyiv.
What does the loan entail?
The EU will provide interest-free loans to Ukraine for the period 2026-2027, based on money the EU borrows from the capital markets.
Hungary, Slovakia and the Czech Republic, whose governments are considered closer to Moscow, have obtained waivers, meaning they will not participate in the joint loan.
Ukraine is not expected to repay the money from its own funds, with the capital to be repaid only after Russia pays war reparations once the conflict ends.
Russia has around 210 billion euros worth of central bank assets frozen in the EU that could be used for repayment.
The sum of 90 billion euros will cover two-thirds of Ukraine's needs for the next two years, estimated at 135 billion euros in total.
Of this amount, Ukraine will receive 45 billion euros in 2026 and another 45 billion in 2027.
Each year, 28 billion euros will be allocated to military spending, and 17 billion euros will be allocated to general budgetary needs.
Officials in Brussels expect other allies to provide the rest of the funding, which has already been pledged for 2026.
New sanctions
The new sanctions package reinforces Europe's efforts to block Russia's energy revenues and military supplies.
In the energy sector, the EU is introducing a total ban on maritime services for Russian crude oil.
That, the European Commission said, will further reduce Russia's energy revenues and make it harder to find buyers for its oil.
Given that shipping is a global business, the EU proposes that this total ban be implemented in coordination with like-minded partners, following a G7 decision.
The new EU measures also put another 43 tankers in Russia's ghost fleet under sanctions.
For the first time, the EU would use the anti-circumvention tool against a third country – Kyrgyzstan, ban transactions with a third country oil port (Karimun, Indonesia) and introduce clauses to protect intellectual property and EU companies against legal actions brought by Russia in third countries.
The 20th package also targets Russia's military industrial complex, particularly its drone production capabilities.
In addition, sanctions on banking institutions in Russia are being expanded, and 120 individuals and entities have been added to the sanctions list, which includes a travel ban, a total ban on transactions and an asset freeze.
