Hungary May Postpone G7's $50BN Loan to Ukraine Until After US Election

The Hungarian government has declared its intention to obstruct a vote on the European Union’s involvement in a $50 billion loan to Ukraine from the Group of Seven (G7). The loan would be repaid through investments and interest earned from frozen Russian funds.

Hungary's Stance on the Loan

Mihaly Varga, the Finance Minister, stated that Budapest believes the decision regarding the loan should be made within the EU after the US election. He expressed the need to observe the direction the future US administration would take on this matter. The $50 billion loan is a strategy developed by Washington and its G7 allies to provide Ukraine with a substantial cash injection without it directly originating from a Western government. The loan terms stipulate that Ukraine will receive $50 billion, and then the G7 countries will use the interest generated from a collective $200 billion in frozen Russian funds to repay the loan.

EU Sanctions on Russia

However, the funds from Moscow are currently frozen due to the EU’s sanctions on Russia. These sanctions are renewed every six months, and it will take several years to repay the loans. The White House has declined to approve the loan until the EU extends the sanctions on Russia for at least three years. Earlier this month, Western officials anticipated that the loan could be approved in October, allowing Kiev access to the funds by the end of the year. However, Budapest's intervention will delay the loan by at least a week.

Hungary's Prime Minister's Views

It is uncertain what Hungarian Prime Minister Viktor Orbán expects to achieve by postponing the loan for a few weeks. Orbán has tried to facilitate negotiations between Russia and Ukraine, but has had little success. Orbán has previously spoken with former President Donald Trump and believes that Trump may attempt to resolve the conflict between Moscow and Kiev if he returns to office. He has urged European leaders to react quickly and strategically.

EU's Reaction to Orbán's Stance

EU leadership has criticized Orbán for his close ties with Russia and China. Ursula von der Leyen, for instance, reprimanded Viktor Orbán for his proximity to Putin and for allowing foreign interference by Russia and China. Orbán has also expressed his preference for the GOP candidate, indicating foreign policy differences between the current Democratic administration and the Trump team.

Trump's Previous Support for Ukraine

However, Orbán's expectation that Trump will attempt to end the war may be misguided. During his presidency, Trump significantly increased Washington’s support for Kiev by providing military aid to Ukraine. Earlier this year, Trump played a crucial role in resolving the Congressional deadlock over the $95 billion foreign military aid bill, which authorized over $60 billion for Ukraine.

Bottom Line

The Hungarian government's decision to delay the G7 loan to Ukraine until after the US election is a significant move that could impact the financial and political landscape in the region. It raises questions about the future direction of US foreign policy, the ongoing conflict between Russia and Ukraine, and the role of international sanctions. What are your thoughts on this development? Do share this article with your friends and join the discussion. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.