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29 Jan, 2024 11:57

Hungary responds to reported EU threat to destroy its economy

Budapest has continued to object to a planned aid package for Ukraine ahead of an EU summit this week
Hungary responds to reported EU threat to destroy its economy

Hungary’s minister for European affairs, Janos Boka, has said that Budapest will not give in to “blackmail” by Brussels, following a report that claimed the EU would seek to sabotage the country’s economy if it does not unblock an aid package for Ukraine.

Ahead of a summit of EU leaders on Thursday, Hungarian Prime Minister Viktor Orban pledged to oppose the use of the bloc’s collective budget to funnel €50 billion ($54 billion) in aid to Ukraine.

Should Orban not lift the veto, Brussels could seek to sabotage Hungary’s economy by pulling funding to the EU member state, the Financial Times reported on Sunday, citing confidential plans drawn up by European leaders seen by the newspaper.

The strategy, the FT noted, could impact Hungary’s currency and incite a downturn in investment, which would affect “jobs and growth.” Boka has insisted however that Hungary will not be dictated to by European bureaucrats.

“Hungary does not allow blackmail,” he wrote on social media late on Sunday. “The agreement confirms what the Hungarian government has been saying for a long time: Brussels is using access to EU resources as a means of political pressure.” 

He added: “Hungary makes no link between supporting Ukraine and access to EU resources and refuses to let others do so. Hungary so far will continue to participate constructively in the negotiations, but it does not allow blackmail.” 

The document, which the FT said was produced by an official in the Council of the EU, highlights what it says are Hungary’s economic vulnerabilities. These include “very high public deficit,” “very high inflation,” a weak currency, and problems with debt repayment.

It added that Hungarian economic growth heavily depends on overseas investment, which, in turn, is driven by “high levels of EU funding.” A spokesperson for the Council of the EU told the FT that it has a policy of not commenting on leaks.

Orban insisted last month that the EU must meet certain conditions before Budapest would lift its veto, including making the package modest in size and scheduling it over one year rather than the proposed four. Hungary must also be exempted from any new joint EU borrowing over the matter, the PM added.

Another tactic reportedly being considered within the EU bloc is to invoke Article 7 of the Treaty of the European Union, which would allow Brussels to strip Budapest of its voting rights. However, this would require unanimity among the other 26 member states – a step many European countries appear unwilling to take.