The Hungarian government is preventing the EU from approving a new tranche of €500 million in military assistance for Ukraine.
The month-long veto was re-affirmed during a meeting of foreign affairs ministers in Luxembourg on Monday.
Josep Borrell, the bloc’s foreign policy chief, said he was “truly sorry” for the persistent impasse, which he described as a “lamentable situation.”
The blockage stems from an unrelated dispute over Kyiv’s list of “international sponsors of war,” a name-shaming public catalogue of private companies that includes OTP Bank, Hungary’s largest commercial bank.
Budapest argues the bank’s designation is “unacceptable” and wants the name to be removed altogether as a pre-condition to green-light the latest package of military aid, worth €500 million, under the so-called European Peace Facility (EPF).
The EPF is an off-budget instrument that partially reimburses member states for the costs of the lethal and non-lethal equipment they provide to Ukraine’s armed forces.
As with any foreign policy decision, the release of each financial package under the EPF requires the unanimity of all 27 member states.
The voting rule has enabled Hungary to put the latest financial envelope on stand-by, causing the frustration of other EU countries and the Kyiv authorities.
“The adoption of the eighth support package for Ukraine is still not solved,” Borrell said at the end of a meeting in Luxembourg.
“I will engage personally with everybody in order to try to solve it as soon as possible because this support package for Ukraine remains vital.”
Meanwhile, Péter Szijjártó, Hungary’s foreign affairs minister, urged his counterpart to “exert pressure on Ukraine,” arguing that “Ukraine could easily resolve the situation by removing OTP Bank if they so desired,” according to a statement provided by a government spokesperson.
The blockage first took place in mid-May, days after Ukraine’s National Agency on Corruption Prevention (NACP) decided to add OTP bank to the list of “international sponsors of war” due to the company’s continued business in Russia.
According to its website, OTP Bank has more than 2.4 million clients and operates over 4,500 locations in Russia. The firm has described Ukraine’s designation as “unjustified” and disproportionate in relation to the bank’s market share.
The controversy also hindered the agreement on a new round of EU sanctions against Russia aimed at tackling the phenomenon of circumvention.
The sanctions were approved last Wednesday but only after the NACP temporarily suspended the listing of five Greek shipping companies, which Athens had criticised, from the list of “war sponsors.”
The NACP, however, did not make any changes to the designation of OTP Bank.