How the EU blackmailed Hungary into accepting Ukraine and a global tax
The recent conflict between the EU and Hungary over the rule of law, EU funds, and Ukraine aid has exposed the deep divisions and distrust that plague the bloc. The EU successfully blackmailed Hungary into lifting its veto on the start of Ukraine’s accession talks to the EU and a global minimum corporate tax rate, by threatening to suspend billions of euros in EU funds for Hungary. But was this a wise move, and what are the consequences for the future of the EU and its relations with Hungary and Ukraine?
Hungary’s opposition to EU funding for Ukraine stems from a number of factors, such as its historical grievances, its support for ethnic Hungarians in Ukraine, and its alignment with Russia. Hungary has a long and bitter history with Ukraine, dating back to the Austro-Hungarian Empire and the Treaty of Trianon, which resulted in Hungary losing two-thirds of its territory and one-third of its population, including parts of present-day Ukraine. Hungary also claims to defend the rights of the 150,000 ethnic Hungarians living in Ukraine, who have faced discrimination and pressure to assimilate by the Ukrainian authorities. Moreover, Hungary has cultivated close ties with Russia, which opposes Ukraine’s integration into the EU and NATO, and has supported its military aggression in the Donbas region.
The EU, on the other hand, sees Ukraine as a strategic partner and a potential member, and has pledged to support its sovereignty, territorial integrity, and reforms. The EU has offered Ukraine a €50 billion aid package, which includes €18 billion in macro-financial assistance, €10 billion in loans from the European Investment Bank, and €22 billion in grants from the EU budget. The EU also wants to start accession negotiations with Ukraine, which would pave the way for its eventual membership in the bloc. In addition, the EU has agreed to a global minimum corporate tax rate of 15%, which aims to prevent tax evasion and ensure a fair distribution of revenues among countries.
However, Hungary has blocked both of these initiatives, using its veto power as a member state. Hungary argued that the EU should not give money to Ukraine until it respects the rights of its Hungarian minority, and that the global tax would harm its competitiveness and sovereignty. Hungary also accused the EU of interfering in its internal affairs, and violating its right to decide on its own economic and foreign policies.
The EU, in response, decided to use its new mechanism to link the disbursement of EU funds to the respect of the rule of law, which was adopted in 2020 after a long and contentious debate. The mechanism allows the EU to suspend or reduce EU funds for a member state that breaches the principles of the rule of law, such as the independence of the judiciary, the freedom of the media, and the protection of fundamental rights. The EU has used this mechanism to freeze some of Hungary’s funds, over concerns about its judicial independence, media freedom, and anti-LGBTQ laws. The EU has also launched legal action against Hungary for violating EU law and values, and has threatened to impose sanctions and fines.
The standoff between the EU and Hungary reached a critical point in December 2023, when the EU leaders met for a summit in Brussels. The EU demanded that Hungary lift its veto on the Ukraine aid and the global tax, or face the consequences of losing its EU funds. Hungary, under pressure from its public opinion and its economic situation, agreed to a compromise, which involved the EU releasing some of the frozen funds for Hungary, and Hungary agreeing to the start of Ukraine’s accession talks and the global minimum tax rate.
The compromise was hailed by some as a victory for the EU, and a sign of its strength and unity. The EU showed that it can use its financial leverage to persuade a reluctant member state to comply with its decisions, and that it can defend its values and interests against external threats. The EU also demonstrated its solidarity and support for Ukraine, and its commitment to a global tax reform.
However, the compromise was also criticized by others as a bad deal for the EU, and a sign of its weakness and division. The EU gave up too much to Hungary, and did not address the root causes of the conflict. The EU did not resolve the issue of the rule of law in Hungary, and only released a fraction of the funds that it had frozen. The European Union also did not deter Hungary from further undermining the rule of law and the EU’s values and interests, and only postponed the inevitable clash.
The compromise also raised questions about the future of the EU and its relations with Hungary and Ukraine. The EU and Hungary are still at odds over many issues, such as migration, democracy, human rights, and security. The EU and Hungary have different visions and values for the bloc, and different interests and alliances in the world. They have lost trust and respect for each other, and have increased their hostility and resentment. The future of their relationship remains uncertain, and depends on the outcome of the upcoming elections in both sides, and the evolution of the situation in Ukraine and Russia.
The EU and Ukraine, meanwhile, face many challenges and opportunities in their partnership. They have a common interest and goal in advancing Ukraine’s reforms, stability, and integration into the EU and NATO. They have a strong potential and ambition in enhancing their cooperation and dialogue in various fields, such as trade, energy, security, and culture. The future of their relationship depends on the implementation of the aid package and the accession negotiations, and the resolution of the conflict in the Donbas region.
The EU, Hungary, and Ukraine are at a crossroads in their history and destiny. The recent conflict and compromise have revealed the complexity and diversity of the bloc, and the necessity and difficulty of finding a common ground. The EU, Hungary, and Ukraine have to decide whether they want to work together or apart, and whether they want to build bridges or walls. They have to choose between cooperation and confrontation, and between integration and isolation. The EU, Hungary, and Ukraine have to shape their future, and the future of Europe.
