Secret documents show the European Union is planning to intentionally damage Hungary’s economy if the country decides to reject more funding for Ukraine at an upcoming meeting in Brussels, the UK’s Financial Times reported.
The documents were devised by EU officials and allegedly aim specifically to target Hungary’s economic vulnerabilities and put its currency in jeopardy, the FT said on January 28.
The plan is to incite a decline in investor confidence in an effort to harm “jobs and growth” should Budapest keeps using its veto over aid to Kyiv, according to the newspaper.
EU leaders will gather in Brussels on February 1 to try to agree on a €50bn four-year aid package to Ukraine, after Orbán blocked compromises in December.
A spokesperson for the European Commission said during the midday press briefing on January 29 the EC was not aware of the documents so was “therefore absolutely not in a position to comment”.
Regarding what the EC could do to impact Hungary financially, the spokesperson said: “On the theoretic front, we can limit access to some funds … we can talk about the conditionality of receiving from certain funds … horizontal financing conditions … these are financial arguments … but always based on existing rules.”
There was, though, “no use to speculate about this matter on the basis of news articles”, as it would be a “bad way of doing things”.
The alleged plans, said to have been produced by an official at the Council, apparently aim for Hungary’s weak spots such as a “very high public deficit,” “very high inflation,” and a “weak” currency.
According to the report, the document points out “growth and jobs … depend to a large extent” on foreign money, which is based on substantial EU funding.
EU diplomats told the FT that many countries backed the plan, seemingly to their dismay.
“The mood has got harsher,” said one. “What kind of union do we have if we allow this kind of behaviour?”
Another said: “The stakes are high. It is blackmail.”
Hungary does not give in to blackmail!
The document, drafted by #Brussels bureaucrats only confirms what the Hungarian Government has been saying for a long time: access to EU funds is used for political blackmailing by Brussels. https://t.co/x5NExCufYm
— Bóka János (@JanosBoka_HU) January 28, 2024
Hungary’s EU minister Bóka János said on X: “Hungary does not give in to blackmail! The document, drafted by Brussels bureaucrats, only confirms what the Hungarian Government has been saying for a long time: access to EU funds is used for political blackmailing by Brussels.
“Hungary does not make link between the support for Ukraine and access to EU funds and rejects other actors doing so.
“Hungary has been and will continue to participate constructively in the negotiations, but will not give in to blackmail,” he said.
Leaving aside its moral implications, not everyone is convinced the alleged plans to force Budapest’s hand would work.
Philip Pilkington, a macroeconomist, investment professional and author of The Reformation in Economics, told Brussels Signal: “It appears the people who put together this aggressive strategy are confused.
“They think that because Ukraine is reliant on EU aid to prop up its currency, Hungary is reliant on EU funds to prop up the forint.
“I assume we are seeing the same phenomenon we saw around the failed Russian sanctions: non-economists drafting economic proposals that make no sense and won’t work,” he added.
Questioned about the relative size of Hungary’s economy, Pilkington said: “It doesn’t matter about the relative size of an economy, so long as it has its own currency and is not reliant on the EU to prop up its external account.
“No one has seriously explained what leverage, exactly, the EU has over the Hungarian economy – and the data suggests it has very little.”
𝐓𝐡𝐞 “𝐬𝐞𝐜𝐫𝐞𝐭 𝐫𝐞𝐩𝐨𝐫𝐭” 𝐥𝐞𝐚𝐤𝐞𝐝 𝐭𝐨 𝐭𝐡𝐞 𝐅𝐓 𝐚𝐛𝐨𝐮𝐭 𝐚 𝐁𝐫𝐮𝐬𝐬𝐞𝐥𝐬-𝐥𝐞𝐝 𝐚𝐭𝐭𝐚𝐜𝐤 𝐨𝐧 𝐭𝐡𝐞 𝐇𝐮𝐧𝐠𝐚𝐫𝐢𝐚𝐧 𝐞𝐜𝐨𝐧𝐨𝐦𝐲 𝐢𝐬 𝐚 𝐜𝐥𝐨𝐰𝐧-𝐬𝐡𝐨𝐰 𝐟𝐮𝐥𝐥 𝐨𝐟 𝐛𝐚𝐬𝐢𝐜 𝐞𝐫𝐫𝐨𝐫𝐬. 🇭🇺
The most obvious is the idea that Hungary has… pic.twitter.com/OsBdQDXtV1
— Philip Pilkington (@philippilk) January 29, 2024
Orbán has insisted that the Ukraine financing package be much smaller, should fall outside the common EU budget, last for just one year as opposed to four and be created in such a way as to shield Hungary from further joint-EU borrowing.
The other 26 Member States are also said to be working on a “plan B”, where the aid money is given on a “bilateral basis”. Observers argue for Hungary that was “plan A” all along.
Regardless of the FT report, the European Parliament is demanding that the EU Council explore the possibility of stripping Hungary of its EU voting rights.