German Chancellor Friedrich Merz has proposed linking the EU's next budget to unanimous support for a multibillion-euro loan to Ukraine. Merz stated that financing Ukraine is a shared European responsibility. He made these comments during a press conference with Hungarian Prime Minister Péter Magyar on Tuesday.
Key Details
The proposal has faced criticism from Slovak Prime Minister Robert Fico. He described it as "classic blackmail." Fico's remarks came during a meeting with Czech Prime Minister Andrej Babiš in Bratislava. He rejected Merz's claim that the budget discussions should include commitments to support Ukraine.
Merz's demand comes as Ukraine faces an estimated €70 billion funding shortfall next year. He has stressed the need for a lasting funding plan for Kyiv, which includes servicing Ukraine-related debt. Ireland's Finance Minister Simon Harris agreed, stating that any honest multi-annual budget must consider Ukraine's funding needs. The EU plans to cover about €45 billion of this gap, in addition to a previously agreed €90 billion Ukraine Support Loan for 2026-2027.
Background
However, Hungary, Slovakia, and Czechia have opted out of the loan and are not expected to contribute more. Bulgaria has also indicated it will not provide additional support. Merz has called for a collective commitment from all member states. He opposes any further opt-outs from the new loan.
Related coverage: Europe Looks to Ukraine, Balkans for Raw Material Supply.
The ongoing budget negotiations could impact the EU's financial stability and affect the euro. This is especially true if member states fail to reach an agreement. Investors will watch for further developments in the EU budget discussions, particularly any resolutions regarding Ukraine's funding needs.
Based on reporting by: politico.eu, euronews.com