WE'LL HELP BUT...

The European Union (EU) has recently agreed to provide Ukraine with a massive aid package worth $50b. This decision came after long and difficult negotiations with Hungary, which had been blocking the deal over its own disputes with the EU. Hungarian Prime Minister Viktor Orban finally accepted a compromise that allowed the EU to sign the agreement with Ukraine.

Beggars cannot be choosers

The EU's president, Charles Michel, said the agreement "fixes sustainable, long-term and predictable funding for Ukraine" and shows the EU's commitment "to support their future, to support freedom".

The aid package, which is made up of two-thirds loans and one-third grants, is not meant to fuel the war with Russia. It also has the goal of preparing Ukraine for joining the EU in the future, as well as helping the economy and funding reconstruction. A separate plan for supplying weapons and ammunition is expected to be approved soon.

Ukraine's economy has been suffering since the war broke out almost two years ago. In the first months of the conflict, the country lost a third of its economic output due to damage and loss of some of its territory. The eastern and south-eastern regions of the country, which are under Russia's control, were the hub of Ukraine's heavy industry. This worsens the economic situation in the country.

Inflation skyrocketed to 26% because the central bank had to print money to fill the budget gap. Although the economy has shown some signs of recovery in 2023, it is clear that Ukraine spends most of the money it gets from taxes on the war. This leads to a huge deficit because there are other expenses to pay, such as pensions and salaries for teachers, doctors, nurses and public servants.

According to Ukraine's budget for this year, the deficit amounts to $43.5b. And if we consider that the EU's aid to Kiev is 50b euros and will be spread over four years, then in 2024 the country can only use about $13.5b of this money to lower the deficit. The rest, which is almost $30b, will have to come from other sources (the US, IMF, donations from individual countries or private foundations, as well as individuals).

However, following the principle "don't look a gift horse in the mouth", and considering that $13.5b a year is still a significant amount, Ukraine's President Vladimir Zelensky welcomed the aid in his post on X. He said that the EU's ongoing financial support would boost Ukraine's long-term economic stability, "which is no less important than military aid and sanctions pressure on Russia".

Therefore, as soon as the European Parliament ratifies the deal, Ukraine could receive the first instalment of money as early as March.

Orban's win is Tusk's loss

It was surprising that Hungary lifted its veto so quickly. After all, we know that in December, Hungarian Prime Minister Viktor Orban opposed the financial aid and stopped it from being adopted. A few days before the vote, he threatened to do the same again. One of the reasons is Hungary's alleged violations of the EU's rules on democracy. As a result of several years of debate on this issue, some of the EU's funding for Budapest was frozen.

Now Budapest agrees to give money to Ukraine in exchange for solving this problem. However, the Hungarian prime minister has set some conditions. Namely, that the aid should not be unchecked and can be revised if needed.

To placate Orban, the leaders agreed that the commission would review the budget in two years if it thought it was necessary. However, such a review would not allow for a future veto. Orban himself called the deal a victory.

He was all smiles after he withdrew his veto on the EU's $50b aid package to Ukraine. He said he had reached his goals: keeping Hungary's money out of Ukraine, and ensuring a control mechanism to check the aid every two years. He also repeated his view on the war in Ukraine: he preferred a ceasefire and peace talks, rather than more conflict with Russia. He shared his victory on X, a social media platform that took over from Twitter.

But Orban's deal did not please everyone. Some European leaders had accused him of extorting the EU and playing politics at the cost of Ukraine's future. They were also concerned that the world was losing interest in helping Ukraine, while Russia was advancing and endangering Europe's security.

The EU was also split internally on the issue of Ukraine. There were not only disputes between the big EU states and some Eastern European countries, but also within the Eastern European bloc itself. Polish Prime Minister Donald Tusk, who had recently come back to power after removing his predecessor Tadeusz Morawiecki, was particularly annoyed with Orban. He said he had "Orban fatigue" in Brussels, and could not tolerate his "very weird and very selfish game".

Poland and Hungary are both part of the Visegrad group, a regional alliance that often challenges the EU's policies. Morawiecki had been more lenient of Orban's interests, as he wanted to keep the group together. But Tusk had a different vision, and wanted to change Poland's foreign policy course. He was also facing internal resistance from Polish President Andrzej Duda, who had questioned the return of Crimea to Ukraine. Duda had said that Crimea had a special historical meaning for Russia, and had been under its rule for a long time. This went against his previous position, when he had backed Ukraine's territorial integrity, including Crimea.

Ukraine's effect on European farmers

Meanwhile, farmers across Europe were protesting against the EU's policies that hurt their livelihoods. They were angry about the high costs of energy, fertiliser and transport, which they blamed on Russia's war in Ukraine. They were also unhappy about the government's efforts to lower food prices amid high inflation, which cut their incomes.

The most violent protests happened in France, but there were also rallies in Italy, Spain, Romania, Poland, Greece, Germany, Portugal and the Netherlands. Agriculture makes up only 1.4 per cent of the EU's GDP, but farmers have a lot of political power. They had already protested last year against cheap Ukrainian imports, and blocked border crossings for days. They forced the EU to listen to their demands, and to suspend some of the rules that required them to leave part of their land unused. They also got subsidies to support their production. The EU's $50b aid package to Ukraine was not the only concession that the European Commission made to calm the tensions with the war-torn country. It also announced that it would extend the suspension of import duties on Ukrainian exports for another year, until June 2025.

Some individual governments also eased some of their restrictions on Ukrainian products. But this was clearly not enough for the farmers across Europe, who were calling for more protests. They were unhappy with the EU's policies that affected their costs, prices and environmental standards. And they were expressing their opinions in the streets, and in the voting booths.

The European Commission President Ursula von der Leyen, who had a goal of achieving zero emissions by 2050, was facing pressure from her own centre-right party to relax the green legislation. She also faced a threat from the far-right parties, who wanted to use the farmer unrest for their own political benefit and electoral victory. For instance, the German far-right party Alternative for Germany took part in the protests and showed support for farmers.

Last March, the Dutch right-wing populist party won a big triumph by backing protesting farmers. The farmers' and citizens' movement (BoerBurgerBeweging) came out of massive protests against the government's environmental policies. It became the biggest party in the Dutch Senate.

Many predicted the right-populists to do well in the European Parliament elections too, and at the same time to lower the support for Ukraine. The right-wing populists tended to concentrate only on the domestic issues of their countries, which were getting more and more complicated. It was not by chance that the EU leadership hurried to approve the aid package for Ukraine under the current makeup of the European Parliament. And it stretched it out over the next four years, as it was not confident of the support of its successors.