Hungary frees €6.6 billion for Ukraine arms

Hungary's new government has ended a two-year veto on the European Peace Facility, the EU fund used to reimburse countries that sent weapons to Ukraine. The money released comes to €6.6 billion. The claims waiting against it are closer to €43 billion. In plain terms, governments that supplied Kyiv will get back about 15 cent for every euro they spent.

Budapest did not move for nothing. Over nine days, it secured €16.4 billion in previously frozen EU structural funds, a minority-rights agreement with Ukraine covering Hungarian-language schools and public administration in Transcarpathia (kormany.hu), and German diplomatic cover. Chancellor Merz, meeting Prime Minister Magyar in Berlin, promised to help Hungary "back to the centre of Europe."

The Reimbursement Squeeze

Kaja Kallas, the EU's foreign policy chief, has proposed splitting the €6.6 billion between reimbursements to member states, the EU's training mission for Ukraine, and direct arms purchases for Kyiv (EEAS, Do Rzeczy). The EPF was originally supposed to let countries recover about 40% of the value of equipment they donated. Under Kallas's formula, that falls to roughly 10%.

Slovakia's defence minister, Robert Kaliňák, put the loss in the bluntest terms. Slovakia expected €250 million and will now receive about €25 million. It sent MiG-29 fighter jets and S-300 air defence systems to Ukraine and will recover only a small part of their value. Poland is facing a similar squeeze (Euronews). Poland, Slovakia and Germany rejected Kallas's proposal at the June 8 meeting of defence ministers.

Who Paid, Who Collected

The political ledger is awkward. The country that blocked the fund has been rewarded more visibly than the countries that emptied their armouries. Hungary never sent weapons to Ukraine. It held the veto for two years, then dropped it after securing €16.4 billion in unfrozen funds and a Ukrainian settlement on minority rights. Slovakia gave away serious military hardware and will get back a tenth of what it expected.

That is not simply a bad bargain. It is built into the structure. The EPF was created in 2021 for modest peacetime burden-sharing, with an original ceiling of €5 billion over seven years. Russia's full-scale invasion broke that model. The ceiling was raised to €17 billion, but member states transferred far more weapons than the fund could ever cover (Kyiv Independent).

The Workaround Architecture

Instead of repairing the EPF, the EU has built around it. SAFE, a €150 billion loan facility for European defence procurement, works by qualified majority voting, meaning no single country can block it on its own. Poland received its first €6.6 billion SAFE tranche on May 29. The Ukraine Support Loan, worth €90 billion, uses enhanced cooperation, which allows a willing group of states to move ahead while others stay out. The EPF is now the last EU military financing tool where one government can stop the whole machine, and it is also the smallest.

Lifting the veto once does not change that. A future Hungarian government could block the EPF again because unanimity remains written into the EU's foreign-policy rules. Germany's foreign minister has called for majority voting to replace unanimity in foreign policy (Deutschland.de), but making that change also requires unanimity. At least ten member states oppose it.

The Pending Fights

Kallas's compromise has not yet been adopted. The final allocation depends on agreement in the Council of the EU, where national ministers legislate, and Poland, Germany and Slovakia are still pushing back. A lawsuit from the Orbán era against the EPF's use of frozen Russian asset revenues is also still before the EU Court of Justice. The Magyar government has not withdrawn it.

The EPF still matters, but less as a war-financing engine than as a queue for bills already run up. SAFE and the Ukraine Support Loan now operate on a much larger scale. The countries that moved first for Ukraine are left waiting at the back of a reimbursement line where the payout keeps getting smaller.