European Union countries reached a preliminary agreement to clear the way for Ukraine to receive crucial aid from the bloc after Hungary dropped its opposition in exchange for a graft-related reduction in financial penalties, according to Bloomberg.
Hungary had been vetoing an €18 billion support package for Ukraine, a measure that requires the consent of all 27 EU members. As part of the deal struck among EU ambassadors on Monday, Hungary removed its block on the money, according to a tweet from the Czech Republic, which holds the EU’s rotating presidency.
As part of the deal, EU nations agreed to approve Hungary’s pandemic-era recovery plan, which entitles Budapest to €5.8 billion in grants. That averted a worst-case scenario for Prime Minister Viktor Orban, which would’ve seen the permanent loss €4.1 billion of such funds for Hungary without an endorsement.
The envoys also agreed to suspend €6.3 billion of EU budget funds allocated to Hungary over persistent corruption issues, which is less than the €7.5 billion the European Commission, the EU’s executive arm, had recommended earlier.
Crucially though, Hungary won’t be able to tap either Covid-recovery funds nor suspended so-called cohesion money before meeting a set of conditions prescribed by the EU’s executive to bolster the rule of law and reduce corruption. Orban’s ministers have said that won’t happen until the second quarter of 2023 at the earliest.
The EU’s block on disbursing the funds to Hungary has been an attempt to bring an end to suspected widespread graft in Budapest and the erosion of the rule of law under more than a decade of uninterrupted rule by Orban.
Hungary’s budget is cash-strapped after Orban’s pre-election spending spree earlier this year, which helped him to a fifth term. Hungary’s energy import costs have also soared in the fallout from Russia’s war on Ukraine.
EU ambassadors also agreed to implement a global minimum tax at the EU level for large multinational corporations after Hungary dropped its opposition.
The eastern European nation will be allowed to include a local business tax in the calculation of the effective corporate tax level, averting the need for Hungary to raise it to meet the global requirement if and when it takes effect, Vilaggazdasag business daily reported late Monday, citing EU documents.