European Union leaders are facing a deepening budget impasse this week as Friedrich Merz threatens to veto the bloc’s 2028–2034 financial framework unless member states agree to a collective, mandatory funding mechanism for Ukraine.
The standoff, which centers on a 70-billion-euro financing gap for Kyiv, has triggered sharp divisions across the continent.
Tension escalated earlier this week when Merz said Germany would no longer bear the primary burden of Ukraine’s financial support alone. In a letter to European Council António Costa, the German Chancellor declared that a firm commitment from all 27 member states to cover Kyiv’s 2027-and-beyond needs is an essential prerequisite for approving the next Multi-annual Financial Framework (MFF), according to reports from Növekedés.
The urgency of the situation stems from Ukraine’s mounting fiscal deficit. President Volodymyr Zelenskyy has indicated that Kyiv faces a 45-billion-dollar funding hole for next year, as the Russian invasion continues and drone-based defense costs rise, Index reported. While the European Commission is working on plans to cover two-thirds of this 70-billion-euro total deficit, the proposed reliance on new joint debt issuance remains a point of contention.
Opposition to the German-led proposal is coalescing among a group of nations seeking exemptions. Slovakia, the Czech Republic, Bulgaria, and Hungary have resisted the plan, citing their own high national debt levels and fiscal constraints.
Robert Fico, the Slovakian Prime Minister, was particularly blunt during a joint press conference with his Czech counterpart, Andrej Babiš, in Bratislava. “The thing the federal chancellor is doing is characteristic blackmail, and I reject it,” Fico said, as cited by Privatbankár.
Babiš echoed these concerns, emphasizing that the Czech Republic is a sovereign state with an equal voice in the European Council. He argued that the current 90-billion-euro loan package for Ukraine already includes significant provisions, and he suggested that the debate should focus on broader post-war reconstruction rather than immediate, open-ended debt guarantees, Infostart noted.
| Country | Stance on New Debt | Primary Concern |
|---|---|---|
| Germany | Pro-Collective | Fair burden sharing |
| Slovakia | Opposed | Fiscal deficit/National debt |
| Czech Republic | Opposed | Sovereign veto rights |
| Hungary | Opposed | Budgetary autonomy |
| Bulgaria | Opposed | High national debt |
The diplomatic calendar is now accelerating to address the deadlock. While the informal EU summit in Dublin, scheduled for November 13, was originally intended to focus on the opportunities and risks of artificial intelligence, António Costa has confirmed that Kyiv’s financing needs will now be added to the discussions, according to the official Council invitation.
This will be followed by an extraordinary summit on November 26 and 27, where the MFF negotiations will take center stage.
The core of the dispute remains the tension between the “frugal” states, which advocate for tighter budgets and a focus on competitiveness and security, and the “friends of cohesion,” who defend regional and agricultural support.
Merz’s decision to tether the long-term budget to the Ukraine aid package effectively forces a confrontation that requires unanimity among all 27 member states. As euronews highlighted, the “frugal” bloc is frustrated by the perception that a few countries are attempting to withdraw from financial solidarity while simultaneously demanding access to cohesion funds.
Despite the calls for a unified approach, the path to a compromise remains obscured. The European Commission, represented by Valdis Dombrovskis, continues to explore options for the 45-billion-euro funding gap, including the potential use of immobilized Russian assets as collateral, as noted in recent Council briefings.
However, Belgium—where many of these assets are held—has historically resisted such measures, leaving the EU with few viable alternatives to a new, potentially divisive, joint credit arrangement.
Whether this impasse is resolved in Dublin or at the end-of-month summit remains an open question, as leaders struggle to balance domestic economic pressures with the geopolitical necessity of maintaining support for Kyiv. “I am a proponent of compromise, and I am ready to negotiate it. But no one can blackmail me with the war in Ukraine,” said Fico.
