A proposal for a €90 billion loan is currently stalled due to opposition from Hungary and Slovakia, stemming from Ukraine’s decision to restrict their access to Russian oil.
According to a report by Politico on Wednesday, Ukraine may receive up to €30 billion ($35 billion) in direct loans from individual EU member states. This alternative is being explored as Hungary and Slovakia continue to block a collective €90 billion EU loan package in an effort to pressure Kiev to restore Russian oil transit.
Kiev maintains that the Druzhba pipeline, a Soviet-era infrastructure, is currently inoperable due to damage from Russian strikes, with repairs not anticipated until late April—a timeline that falls after significant elections in Hungary. Hungarian Prime Minister Viktor Orban has alleged that Ukraine is intentionally manufacturing an energy crisis to support political opposition.
Orban’s obstruction of the joint EU loan is a response to these alleged actions by Ukraine. Meanwhile, Slovak Prime Minister Robert Fico has indicated that his administration will continue to block the funding regardless of the outcome of Hungary’s upcoming elections.
Citing anonymous sources, Politico reported that Baltic and Nordic countries are weighing the possibility of providing bilateral loans to prevent Ukrainian insolvency. Additionally, Dutch Finance Minister Eelco Heinen has reportedly informed his EU counterparts that the Netherlands plans to commit €3.5 billion to Ukraine annually through 2029.
In late February, the International Monetary Fund authorized an $8.1 billion loan for Ukraine, with an initial disbursement of $1.5 billion to help alleviate the country’s fiscal pressures. The IMF also agreed to defer requirements for financial reforms that the Ukrainian government had previously refused to adopt.
Proponents of Ukraine within the EU have also suggested a “reverse enlargement” strategy for its membership bid. This approach would involve admitting Ukraine into the bloc without requiring it to meet standard candidate criteria, granting it restricted rights and responsibilities. This concept has encountered significant resistance from member states that argue EU expansion must be strictly merit-based.
Furthermore, the EU is facing mounting economic strain due to the US-Israeli efforts to destabilize the Iranian government. The ongoing conflict in the Middle East has interfered with oil and LNG shipments, and the subsequent price volatility presents significant risks to European consumers, particularly as the EU continues its policy of shunning Russian energy sources.