Prof. Federico Fabbrini
Not every political problem can be solved through a creative legal solution. But at times, politics can overcome problems that do not lend themselves to legal solutions. This is what happened with Europe’s €90 billion loan for Ukraine, which was finally approved at the end of April. What unlocked the situation was the election held in Hungary on 12 April, with the defeat of the outgoing Prime Minister Viktor Orban, who had been in power for 16 years with his right-wing party Fidesz. With the victory of the right-wing party Tisza, led by the incoming Prime Minister Peter Magyar, Hungary withdrew its veto on the approval of the Council regulation authorizing the issuance of common debt, which entered into force as a revision of the EU Multiannual Financial Framework (MFF): see Council Regulation 2026/469, published in the Official Journal on 23 April.
As will be recalled, the EU decision to fund Ukraine through the issuance of common European debt had been taken by the European Council in December 2025. On that occasion, the heads of state and government had decided to establish the financing for Ukraine in the form of enhanced cooperation among 24 countries, thus exempting Hungary, Czechia, and Slovakia from bearing the costs of the operation. However, the use of enhanced cooperation was a red herring, since the financing for Ukraine was based on the issuance of common EU debt, which required an amendment to the MFF to be approved unanimously. At the beginning of the year, for purely domestic political reasons, Hungary placed its veto on the revision of the MFF regulation necessary to allow the issuance of common EU debt. This had blocked EU support for Ukraine, despite the Commission’s attempt to prepare the necessary implementing acts in the hope that the Hungarian elections would bring good news. That proved to be the case, and the EU has finally managed to mobilize its resources to provide €45 billion per year for the next two years, to be spent both on financing the Ukrainian defense industry and the general state budget.
The troubled story of the EU’s financing for Ukraine, however, provides an opportunity to reflect on how the EU budget operates, and its shortcomings.
Indeed, the €90 billion loan is the third mechanism set up by the EU to help Ukraine since Russia launched its large-scale war four years ago. Already in 2022, the EU approved a Macro-Financial Assistance instrument worth €18 billion, followed in 2024 by the Ukraine Facility, worth €50 billion for the period 2024–2026. On each of these occasions, the approval of the funding required an amendment to the regulation establishing the MFF –originally adopted in December 2020, at the height of COVID-19 and long before any return of war in Europe could be envisaged. On both of these occasions, moreover, Viktor Orban’s Hungary placed a veto on the amendment of the MFF, delaying European action until the EU made concessions to Hungary on other matters (mostly relating to the payment of Recovery and Resilience funds to Hungary, partially suspended due to the erosion of democracy and the rule of law in that country). The story thus repeated itself in exactly the same way this time as well – a foreseeable consequence of the fact that the MFF requires unanimity both for its adoption and for its revision. And although Orban’s electoral defeat has now removed one veto player within the EU, what guarantees that on the next occasion when the EU must approve new funding (whether for Ukraine or anyone else), there will not be another prime minister from another member state invoking the veto and blocking the entire EU?
On the other hand, the very nature of the MFF – the fundamental act governing the EU budget for a seven-year period, setting expenditures in light of the Own Resources Decision (which determines revenues) – is problematic. By aiming to lay out spending for a very long period of time (with the objective of reducing the complex negotiations associated with decisions on money), the MFF is nowadays entirely incapable of endowing the EU with the flexibility needed to respond to changes in context. The current MFF, as noted, is designed to govern the budget until 2027, but it was adopted in 2020 – long before Russia’s aggression against Ukraine, before Trump’s re-election as President of the United States, and before two major energy crises struck the competitiveness of the European economy. The MFF was not designed for today’s reality – and precisely for this reason it has already been amended three times (see Council Regulation 2022/2496, Council Regulation 2024/765 – in this case with significant changes to the allocation of resources for defense and migration – and, most recently, Council Regulation 2026/469). These amendments, however, operate only at the margins, without truly altering the EU’s financial strategy, and as explained above they are always threatened by the veto of one of the member states. Is this system of managing financial resources suited to an increasingly dynamic world?
In short, the experience of the delayed financing for Ukraine exposes two structural problems in the way the EU finances itself. On the one hand, the fact that the approval of the MFF and its amendments requires unanimity among the 27 states in the Council slows down and often blocks EU action. On the other hand, the fact that the MFF provides for a long period of seven years condemns the European budget to irrelevance when circumstances change, as they often do. Unfortunately, both the rule of unanimity and the multiannual nature of the MFF are directly laid down in the Treaty on the Functioning of the European Union (Article 312). Although political will is indispensable, a legal solution is nevertheless required to address this problem.
Prof. Federico Fabbrini is the Principal Investigator of the Jean Monnet Centre of Excellence COMPETE. He is a Full Professor of European Law at Dublin City University and Founding Director of the Dublin European Law Institute and DCU Brexit Institute.