Hungary has stated that it will not approve a new €500 million tranche of EU military aid for Ukraine unless Ukraine removes Hungary’s largest commercial bank, OTP, from its “sponsors of war” list. Foreign Minister Peter Szijjarto made this announcement during a press conference on Wednesday. Hungary has been blocking any further financing of arms shipments to Ukraine since OTP was included on Ukraine’s “list of shame.”
In May, the Ukrainian National Corruption Prevention Agency (NCPA) designated OTP as an “international sponsor of war” due to allegations that the bank was providing preferential lending terms to the Russian military. OTP, which is the largest independent lender in Central Europe and one of the 50 biggest banks in Russia, has approximately $507 million in assets in its Ukrainian division. In 2021, OTP’s Russian and Ukrainian businesses accounted for 15.8% of its consolidated net profit.
Szijjarto emphasized that Hungary will not support the European Union’s request for an additional €500 million from the European Peace Facility (EPF) until Ukraine removes OTP and its executives from the list. The release of the financial aid package to Ukraine under the EPF requires unanimous approval from all 27 EU member states. Hungary previously blocked the EU’s military assistance tranche for Ukraine in May, citing Ukraine’s increasingly hostile attitude towards Hungary.
Budapest has strongly criticized Kiev for its actions, calling them “outrageous” and “unacceptable.” Hungary has warned that it will not only block the €500 million tranche but any further military assistance to Ukraine as well. This dispute between Hungary and Ukraine raises concerns about the potential implications for EU-Ukraine relations and regional stability.
The inclusion of OTP on Ukraine’s “sponsors of war” list has had significant consequences for Hungary’s position within the EU. It sets a precedent for other EU member states potentially facing similar consequences if their banks are accused of providing support to entities deemed as sponsors of war. This not only impacts Hungary’s bilateral relationship with Ukraine but also has wider implications for EU solidarity and cooperation.
The issue has highlighted the complex dynamics and tensions between Hungary and Ukraine. The two countries have had a strained relationship in recent years due to a range of issues, including language rights for ethnic Hungarians living in Ukraine and disagreements over Ukraine’s education law. The inclusion of OTP on the “list of shame” is the latest development in this ongoing dispute.
The Hungarian government’s insistence on OTP’s removal from the list underscores the significance of the bank for Hungary’s interests. OTP plays a vital role in Hungary’s economy and its inclusion on the “list of shame” is seen as a direct attack on Hungary’s financial sector. Hungary’s response, therefore, can be seen as a defense of its national interests and a firm stance against what it perceives as unjust actions by Ukraine.
The implications of this ongoing dispute are likely to be far-reaching. The EU will need to address the concerns raised by Hungary and find a resolution that ensures the cohesion and unity of its member states. The outcome of this issue will not only impact EU-Ukraine relations but will also have broader implications for EU foreign policy and the ability of member states to act in their national interests.
In conclusion, Hungary’s refusal to approve EU military aid for Ukraine until OTP is removed from Ukraine’s “sponsors of war” list highlights the strained relationship between the two countries and raises concerns about the broader implications for EU-Ukraine relations. This issue requires careful diplomacy and a resolution that promotes unity and cooperation within the EU while safeguarding the interests of its member states.
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