Hungary will block further European Union financial aid to Ukraine for what its foreign minister said was an “increasingly belligerent” attitude on the part of Kyiv toward its European Union neighbor.
(Bloomberg) — Hungary will block further European Union financial aid to Ukraine for what its foreign minister said was an “increasingly belligerent” attitude on the part of Kyiv toward its European Union neighbor.
Hungary will block a further €500 million-euro ($542 million) tranche of EU financial assistance to Ukraine for now and would be reluctant to back further sanctions against Russia, Foreign Minister Peter Szijjarto said on Wednesday.
“It’s fair to say that we’ve had enough,” he said at a briefing in Vienna, listing three developments that underpinned Hungary’s decision.
They included Ukraine’s decision to add OTP Bank Nyrt., Hungary’s largest lender, to a list that shames companies that continue to do business in Russia.
He also said that Ukraine was limiting the educational rights of the country’s ethnic Hungarian citizens. He lastly pointed to a report from the Washington Post suggesting that President Volodymyr Zelenskiy had at one point talked about blowing up the pipeline delivering oil from Russia to Hungary via Ukraine.
“I want to make clear that as long as Ukraine keeps OTP on its list of international war sponsors, we can’t support decisions requiring new economic and financial sacrifice on the part of the European Union and its member states,” Szijjarto said. “The same goes for sanctions.”
The comments upended a forint rally as investors were once again put on edge about the potential market fallout of a deepening rift between Hungary and the EU. The currency dropped as much as 0.8% against the euro and more than 1% against the dollar.
Prime Minister Viktor Orban’s government, widely seen as Russa’s closest partner in the EU even after Moscow’s full-scale invasion of Ukraine, is struggling to unlock more than $30 billion of the bloc’s funds that have been suspended due to concerns over graft and the rule of law.
Orban has dragged his feet on supporting the bloc’s penalties against Russia and refused to join other members by supplying weapons to Ukraine.
He has also urged the EU to consider cutting financing to Kyiv, which critics have said is akin to pushing for capitulation to Moscow’s aggression.
“At least some market participants may decide to trim their exposure in case a major diplomatic spat between Budapest and Brussels unfolds, resulting in Hungary not receiving EU funds,” said Piotr Matys, a senior currency analyst at In Touch Capital Markets in London.
(Updates with market fallout from seventh paragraph.)
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