Is the EU about to break apart under the stress of taking over the full weight of supporting Ukraine, the need to rearm and the hundreds of billions that must be invested if it is to become competitive again?

Hungary is causing a lot of problems and vetoed attempts to raise tens of billions of euros of support for Ukraine at an EU summit on March 20 at a time when it is becoming increasingly clear that US President Donald Trump will end all military and financial support for Ukraine as soon as he can.

EU rules require any motion in the Council of Europe to be approved by all 27 members, and Hungarian Prime Minister Viktor Orban’s obstinance has led to talk again of enacting Article 7 of the EU founding treaty that can be used to remove a member’s voting rights.

Article 7 permits the European Council to “determine the existence of a serious and persistent breach” of the values of Article 2, with a view to depriving the offending country of voting rights in the Council.

Slovak Prime Minister Robert Fico is allied with Orban and also seen as amongst the most pro-Russian EU members, having travelled to Moscow at the end of last year to strike a new gas deal with Russian President Vladimir Putin.

Both leaders have been insisting on their countries’ exemption from the ban on importing Russian gas to keep the lights on their economies and have blocked multiple attempts to sanction Russia, as well as banning the transit of Ukrainian agricultural goods to the rest of the EU. Even Poland has unilaterally, and illegally, blocked Ukraine’s grain imports to the EU, after cheap Ukrainian grain wrecked the Polish grain market last year.

However, beneath the surface support for Ukraine in the EU is varied, with the strongest supporters in Northwest Europe, fading the further south you travel. Notably France, Italy and Spain all refused to sign off on EU foreign policy chief and former Estonian prime minister Kaja Kallas’ call for first a €40bn aid package and then a cut down €5bn package at a summit in Brussels this week.

The problems have escalated rapidly in just the last month. US President Donald Trump has undermined Nato, “probably fatally,” according to Andrew Duff and Luis Garicano, both former members of the European Parliament, writing in an opinion piece for Politico, that has forced European Commission President Ursula von der Leyen to launch a €800bn ReArm programme this month that is only putting more financial pressure on EU members. And even that has to contend with Orban and Fico vetoes.

“Amid this shifting geopolitical landscape, Europe desperately needs to react, rapidly and decisively, to ensure its future security. Unfortunately, Hungarian Prime Minister Viktor Orbán is determined to avoid such resolute action,” says Duff and Garicano.

Article 7

Using the EU’s Article 7 is a nuclear option that has never been tried before. Moreover, the wording of the clause is written in a way that it implies it can only be enacted against a single country. Orban’s “get out of jail free” clause is that for Article 7 to be enacted, it must be approved by 26 of the 27 members and Orban can count on Fico’s veto to block the motion.

However, some legal experts have speculated that if proceedings are started in parallel against both Hungary and Slovakia, that would disqualify either country participating in the vote on either, reducing the number of votes needed to strip them of their votes to 25 members in each case. Clearly any attempt to invoke Article 7 will quickly get bogged down in legal wrangling.

But a precedent has already been set: earlier this month, the European Council took the unprecedented step of issuing a communiqué supporting Ukraine signed by 26 members, not 27. Orban abstained.

The fight will start by the other members invoking the clause in the treaty relating to countries refusing “enhanced cooperation between groups of countries willing to integrate faster” (Article 20) as the justification for invoking Article 7.

Orban has already allowed Ukraine’s accession talks to join the EU to start after he abstained and did not veto a decision to begin the negotiations at the end of last year. However, Duff and Garicano warn that the EU has to change its 2020 procedural rules, which currently allow a member state to veto a vote to accept the opening and close of each of the dozen chapters; this should be changed to giving members the power of veto only at the start and end of the entire process, the former MEPs say.

And the need for change is pressing. Ukraine has been promised EU membership sometime in the next ten years, but before this can happen the EU will have to go through deep reforms to accommodate it. As bne IntelliNews has reported, Ukraine cannot join the EU unless Common Agricultural Policy (CAP) is reformed. Agricultural subsidies already make up a third of the EU budget expenditures and Ukraine’s agricultural sector is so massive and so productive it would be entitled to up to €186bn in EU subsidies under the current rules, swamping the rest of the EU’s agricultural sector if import duties are entirely removed. Countries like Hungary and Poland would go from net beneficiaries of EU subsidies to net contributors to the EU budget as a result. Both countries are likely to block Ukraine’s accession on these grounds alone until the subsidy rules are changed. Talks on reforming the EU budget are due to begin next year and will get nowhere under the current set-up. At the same time von der Leyen has launched a massive ReArm investment programme that will cost hundreds of billions of euros that Hungary and Slovakia are likely to try and block.

One attempt to reform the EU voting system has already been made when French President Emmanuel Macron and former German Chancellor Angela Merkel tried to force through a change from unanimous voting to a simple qualified majority in certain areas with the Meseberg Declaration in June 2018, just before Merkel left office. The motion was roundly rejected, as smaller EU members were afraid of the institution being dominated by the larger members.

To avoid all these problems EU members may invoke Article 7, the exact wording of which says: “Acting by unanimity on a proposal by one third of the Member States or by the Commission and after obtaining the consent of the European Parliament may determine the existence of a serious and persistent breach by a Member State of the values referred to in Article 2.”

Article 2 enshrines a commitment to the values that the EU is built on.

“The Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. These values are common to the Member States in a society in which pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men prevail,” Article 2 says. Both Hungary and Slovakia are clearly in breach of this article.

Values fault line

The truth of the matter is that the accession countries that joined in 2003 have never been that keen on EU values. As bne IntelliNews has reported, there is a values fault line that runs through the middle of Europe where “old Europe” subscribes to the values but those countries to the east of the line do not.

Hungary’s Orban is famously illiberal. This week the Hungarian government introduced a law banning gay pride marches, the litmus test of a country’s commitment to the EU’s Article 2 values.

There are a dozen other countries that do not have gay pride marches, as a significant proportion of the former Warsaw Pact countries remains deeply homophobic. Czechia is one country that has made the transition and has a vibrant gay pride march each year. Ukraine held its first gay pride march under Former President Petro Poroshenko but the 100-odd participants were surrounded by a double cordon of riot police to protect them. Since then Kyiv’s pride march has turned into something of a party. People in Georgia, formerly the poster boy of liberal reforms in the Former Soviet Union (FSU), have died in violent protests against its efforts to hold a gay pride march and nowhere in the FSU has a gay pride march.

Poland is another good example of the half-hearted commitment to the EU values. Under Prime Minister Donald Tusk Poland has become a leading power in the coalition of the willing, but the previous Law and Justice (PiS) government constantly clashed with Brussels over legal reforms that undermined the independence of the judiciary.

And governments across the EU have swung to the right in the last year, most notably the stunning electoral success of the far-right AfD (Alternative für Deutschland) that came second in the recent German general election, taking 20% of the vote.

Aid to Ukraine fiasco

EU foreign policy chief and former Estonian prime minister Kaja Kallas’ efforts to raise money to support Ukraine, as it is becoming increasingly clear Trump will cut Kyiv off, have ended in fiasco.

The long-promised G7 $50bn loan to Ukraine, approved last June at a G7 summit in Italy, backed by profits earned by the Central Bank of Russia (CBR) frozen $300bn in assets, has started to trickle into Ukraine at the rate of about €1bn a month. The EU is due to transfer a total of €18.1bn under this mechanism. But Ukraine’s monthly deficit is on the order of $4bn. More money will be needed.

This week Kallas tried to separately raise €40bn in “voluntary” contributions from EU members, thus sidestepping a Hungarian veto. That discussion was almost immediately shot down as various EU government’s pleaded budget problems.

Kallas, who is a leading European hawk on Russia, repackaged the effort into a more modest €5bn pledge ahead of an EU summit in Brussels on March 20, but that too emerged stillborn for the same reasons. Surpisingly the €5bn package was blocked by France and Italy, two of Ukaine's most ardent supporters.

Kallas has been fixated on wounding Russia and has attempted to bulldoze the other EU members into supporting her efforts, without having the executive power to force any of her plans through.

"She still behaves like a prime minister. She hasn’t realised that she now has a different job," a Central European diplomat told Politico.

EU politicians told Politico that Kallas “botched” her homework and failed to win prior buy-in from crucial stakeholders ahead of the debate.

The original formulation of the "Kallas plan" had been to ship Ukraine at least 1.5mn rounds of artillery ammunition in 2025, but that was quickly vetoed by Hungary. But subsequent requests for more money were met with a cool reception, particularly by countries in Southern Europe which have been less eager than those in the east or the north to make sacrifices to aid Ukraine. In the end, even France, the bloc's biggest military power, baulked at signing away billions of euros at a time when it is facing its own budget crisis.

Kallas' plan was further undermined by ambassadors from France, Italy and Slovakia, who said on March 19 that countries should contribute on a "voluntary basis" only and only as much as they are comfortable with.

Thanks to a surge in aid and arms in December by the outgoing Biden administration, Ukraine has funds enough for the whole year, although experts say its ammo and missile stocks could be depleted by summer if the US halts supplies.

Orban looks isolated as the lone member to veto the aid packages to Ukraine, but some analysts say that he actually has much wider support from many EU members that are allowing him to take the flak, but quietly are as uncomfortable with the huge demands for money being made by Brussels. Under EU rules all these packages have to be approved by all of the 27 members, giving each country a de facto veto.

The EU members are due to meet again in June to have another go at passing a Ukraine support package.

In the meantime the EU will muddle through, Vice President of the European Commission Valdis Dombrovskis said during a meeting with journalists in Kyiv on 20 March, European Pravda reports.

Dombrovskis said that the plan to finance Ukraine under the Extraordinary Revenue Acceleration (ERA) is to "continue [to provide] €1bn monthly, and then in December – €6bn to cover the beginning of 2026".

"Under the Ukraine Facility, we plan to disburse the next €4.5bn tranche in April, but this also depends on certain conditions being met," he added.