Budapest and Bratislava may block a loan to Ukraine by leveraging the corruption scandal — media

Hungary and Slovakia may use the corruption scandal in Ukraine as an additional argument to continue blocking the EU’s “reparations loan,” claiming the money could be stolen.

This is reported by Politico.

According to the outlet, Budapest and Bratislava are already refusing to provide Belgium—the main holder of Russian assets—with guarantees regarding legal consequences. And even if the initiative is approved, EU countries would still have to give unanimous approval every six months, as with other sanctions.

If the decision is approved, some EU governments—such as Germany—would still need to obtain guarantees for Belgium from their national parliaments. That process could take several months.

The murky outlook for confiscating Russian assets will likely force the EU to offer Kyiv interim loans. The IMF’s next $8 billion tranche also depends on the reparations loan.

According to Politico, Ukraine will start tightening its belt from April if no new funds arrive from either the EU or the IMF. First, money reserved for next year will be used—such as budget transfers from state banks’ dividends. Then Kyiv will begin delaying funding for regions and reconstruction works. As a last resort, it would delay salary payments to civil servants, doctors, pensioners, and the military.

As a reminder, the European Union postponed a decision on using the Russian central bank’s frozen assets until December. This happened after Belgium demanded additional guarantees that it would not bear liability for the risks tied to the $140 billion in loans.