THE European Union has reached a deal with Hungary to unblock €18 billion (RM84.02 billion) in financial aid to Ukraine, in return for reducing the amount of funding Budapest has seen frozen by the bloc.

Hungary had been blocking key EU initiatives, including the vital support for Kyiv and a minimum corporate tax plan, in a bid to pressure the bloc over its own funding row.

Brussels last month recommended freezing €7.5 billion of EU funds for Budapest, citing concerns over alleged corruption.

It has also been holding back €5.8 billion of post-Covid-19 EU recovery money due to Hungary’s democratic backsliding and fears over its respect for judicial independence.

After days of haggling, EU ambassadors struck a compromise yesterday that saw Budapest greenlight the aid for Ukraine for next year and the 15% minimum tax.

In return, diplomats said the other EU countries agreed to cut the amount of frozen funds to €6.3 billion and take a step towards giving Budapest the post-Covid-19 money.

“Megadeal!” tweeted the Czech presidency of the EU late yesterday.

The package is set to be formally confirmed later in the week.

The compromise with Hungary’s right-wing Prime Minister Viktor Orban means the EU can make good on its pledge to keep backing Ukraine as it fights Russia’s invasion.

It also maintains key levers over Budapest in a long-running dispute with Orban over concerns about the rule-of-law and democracy in Hungary.

Despite freeing up some €1.2 billion, Orban will still need to convince his fellow EU members that he has carried out key reforms to unlock the rest of the funds in future.

“Autocrats in the EU will now have their EU funds cut. This decision is historic,” said German MEP Daniel Freund. “Viktor Orban’s attempts at blackmail were not successful.”

Hungary had denied it was blocking the other initiatives to get its cash.

But its claims were dismissed by European diplomats long used to Budapest stalling key plans to get its way. – AFP, December 13, 2022.