Hungary Blocks €90 Billion EU Loan to Ukraine Amidst Pipeline Dispute
Hungary has blocked a planned €90 billion European Union loan to Ukraine, linking the decision to a halt in the flow of Russian oil through the Druzhba pipeline. The pipeline, which transports Russian crude oil through Ukrainian territory to Central Europe, experienced an interruption in shipments to Hungary and Slovakia since January 27, leading to a diplomatic dispute and reciprocal actions among the nations involved.
Pipeline Disruption and Conflicting Claims
The interruption of Russian oil shipments via the Druzhba pipeline to Hungary and Slovakia began on January 27. Ukrainian officials attributed the disruption to a Russian drone attack that reportedly damaged the pipeline infrastructure in Western Ukraine. Ukraine stated that repairs are ongoing and require time, citing broader Russian attacks on the country's energy infrastructure.
Conversely, Hungary and Slovakia have presented differing accounts. Hungarian Foreign Minister Péter Szijjártó accused Ukraine of deliberately delaying supplies, creating an "oil blockade," and "blackmailing" Hungary. Slovak Prime Minister Robert Fico also claimed that Slovak intelligence indicated no damage to the pipeline, suggesting Ukraine had no interest in resuming transit. Hungarian Prime Minister Viktor Orbán further claimed, without providing evidence, that Ukraine was intentionally delaying oil flows to influence upcoming Hungarian elections.
Ukrainian forces reportedly struck a Russian pumping station that supplies the Druzhba pipeline on one occasion.
Hungarian and Slovak Responses
In response to the halted oil flows, Hungary initiated several actions:
- It suspended diesel exports to Ukraine, awaiting the resumption of oil flows through Druzhba.
- Hungarian Foreign Minister Péter Szijjártó stated that Hungary would block a planned €90 billion EU loan intended to support Ukraine's military and economic needs for the next two years. Szijjártó affirmed this position by stating:
"As long as Ukraine blocks the resumption of oil supplies to Hungary, Hungary will block European Union decisions that are important and favourable for Ukraine," and "If there's no oil, there's no money."
- Prime Minister Orbán also indicated that Hungary possesses "other tools" beyond financial aid, referencing Ukraine's electricity supply, of which 40% reportedly passes through Hungary. He further threatened to veto new EU sanctions against Russia and the EU's next seven-year budget if it includes financial aid for Ukraine.
Slovakia's Prime Minister Robert Fico announced that if Ukraine did not resume oil supplies by a specified Monday, he would direct relevant Slovak companies to cease emergency electricity supplies to Ukraine. Fico later stated that Slovakia would continue a blockage if the pipeline remained unrepaired, even if there was a change in Hungarian leadership.
Ukraine's Position and Actions
Ukraine's Foreign Ministry rejected the demands from Hungary and Slovakia, stating:
"Ukraine rejects and condemns the ultimatums and blackmail by the governments of Hungary and the Slovak Republic regarding energy supplies between our countries." The ministry added that ultimatums should be sent to the Kremlin.
Ukrainian President Volodymyr Zelenskyy denied allegations of intentionally sabotaging the pipeline. Ukraine proposed alternative transit routes to ship oil to Europe while pipeline repair works are in progress, including through Ukraine's Odesa-Brody oil transportation system or via a maritime route. Ukraine consistently reiterated its readiness to ensure oil transportation within the available legal framework.
President Zelenskyy invited Slovak Prime Minister Fico to visit Ukraine for discussions, an invitation Fico accepted. Fico later briefed Zelenskyy on a joint proposal with Prime Minister Orbán to establish an expert inspection group, nominated by EU member states and the European Commission, to assess the pipeline's damage. While the European Commission welcomed this initiative, Zelenskyy initially rejected the idea of Slovak or EU ambassadors conducting an inspection, citing a negative position from Ukrainian intelligence services. Ukraine subsequently permitted an external inspection and accepted the EU's offer of technical and financial support for the repairs.
European Union Involvement and Reactions
EU leaders widely criticized Hungary's decision to veto the €90 billion loan for Ukraine. European Council President António Costa stated that leaders condemned Orbán's stance, emphasizing that agreements must be honored and that EU institutions could not be blackmailed. Costa affirmed that the loan, agreed upon in December, would still be disbursed. German Chancellor Friedrich Merz called Orbán's action an "act of serious disloyalty," and other leaders suggested changing voting rules if necessary.
The European Commission offered "technical support and funding" for the pipeline repairs, an offer Ukraine accepted. European experts were made available for immediate assistance. The European Commission also convened an emergency meeting with Hungary, Slovakia, and Croatia to explore alternative oil transport routes, though Croatia's reported refusal to transport Russian oil presented a challenge.
Some EU member states reportedly considered punitive actions against Hungary, including the removal of its voting rights or stricter limitations on its access to EU funds. However, EU officials were cautious about taking aggressive action before Hungary's upcoming election, to avoid strengthening Prime Minister Orbán’s narrative of foreign interference.
Broader Context
Hungary and Slovakia remain the sole EU countries significantly reliant on Russian oil delivered via the Soviet-era Druzhba pipeline, which transits through Ukraine. Both countries possess temporary exemptions from an EU policy that prohibits the import of Russian oil. Most other European countries have significantly reduced or entirely ceased Russian energy imports since February 24, 2022.
The dispute occurred amidst Hungary's April parliamentary elections, during which Prime Minister Orbán's campaign has reportedly utilized anti-Ukrainian narratives. Both Hungarian Prime Minister Orbán and Slovak Prime Minister Fico have maintained cordial relations with Moscow, diverging from the broader pro-Ukrainian stance prevalent in Europe.
The €90 billion EU loan is considered critical for Ukraine's budget needs for 2026 and 2027, particularly as the United States has reduced assistance. Without it, Ukrainian authorities indicated potential difficulties in meeting financial obligations.