Merz ties EU budget to Ukraine aid; four states push back

Germany has put the European Union's next long-term budget on the line over Ukraine. In a letter to European Council President António Costa, Chancellor Friedrich Merz wrote that a collective commitment by all 27 member states to help close Ukraine's funding gap is an "essential prerequisite" for agreeing the bloc's 2028–2034 budget and "any further matters, particularly those with financial implications". Four countries, Slovakia, the Czech Republic, Hungary and Bulgaria, rejected the linkage on Tuesday 10 November 2026, and Slovak Prime Minister Robert Fico called it "typical blackmail".

The clash sets up difficult talks at an informal summit of EU leaders in Dublin this Friday and a special budget summit in Brussels on 26–27 November.

What did Merz demand?

The letter, dated 6 November and first reported by the Financial Times, has since been seen by the Guardian, Euronews and Rapporteur. In it Merz argues that support for Ukraine is in the EU's "shared vital interest", but that "bilateral assistance to Ukraine is distributed unevenly and carried mostly by only a few member states". He writes that "a collective commitment … without exception" is needed before Germany will move on other financial questions.

Merz also asks that the next seven-year budget, known as the multiannual financial framework (MFF), include a "sound" multi-year financing perspective for Ukraine from 2028, including interest costs that have already built up on earlier loans, according to Rapporteur. The Guardian reported that Berlin also wants decisions on funding Ukraine to move from unanimity to qualified-majority voting, so a single government could not block them.

A German government official told the Guardian: "Financial support for Ukraine of all EU member states is essential in order to successfully complete the MFF."

Both the MFF and new joint borrowing for Ukraine need unanimous agreement among member states, which is why tying them together raises the stakes. Germany is the EU's largest net contributor to the budget, and it also wants steep cuts in the proposed spending plan.

How big is Ukraine's funding gap?

The EU agreed last year to lend Ukraine €90 billion, intended to cover about two-thirds of its military and civilian needs for 2026 and 2027. Russia's continued bombardment has since added costs, and President Volodymyr Zelenskyy has asked for €70 billion to fill a budget shortfall, the Guardian reported.

The EU has endorsed that figure and pledged to find about €45 billion, roughly two-thirds, through an instrument that has not yet been defined. Ukraine's other allies, including the UK and Canada, are expected to cover the rest. Euronews reported that a new round of EU joint borrowing has emerged as the frontrunner option.

Hungary, Slovakia and the Czech Republic secured exemptions from the existing €90 billion loan, and the other 24 countries share its roughly €3 billion in annual interest costs in proportion to the size of their economies, according to Rapporteur. All three, now joined by Bulgaria, have said they want to stay out of the next round too.

Merz had earlier pushed to use some of the roughly €210 billion of Russian central bank assets frozen in the EU to fund Ukraine, but that plan was blocked by opposition led by Belgium, where most of the assets are held, the Guardian reported. The €90 billion loan was the fallback.

Why are four countries objecting?

Fico, speaking in Bratislava alongside Czech Prime Minister Andrej Babiš, said: "What the chancellor is doing is typical blackmail, and I will not give in to it." Euronews quoted him as threatening his own veto: "Just as Mr Merz talks about using his veto, I can say exactly the same."

Hungary's Prime Minister Péter Magyar, who met Merz in Berlin on Tuesday, took a softer tone but the same position. He said he did not consider the letter blackmail, but that linking the budget with Ukraine aid "does not necessarily have a good message". He said Hungary could not commit to fresh EU-level debt while it is struggling to contain a large public deficit, adding: "We will find a solution for the EU budget. I am sure of it."

Bulgarian Prime Minister Rumen Radev, speaking in Varna, also cited high deficits as the reason Bulgaria wants an exemption from future credit lines, while saying his country would keep supporting Ukraine through other means, such as energy flows, and was "in no way blocking" decisions taken at Council level.

There is also a budget fight underneath the Ukraine dispute. All four countries belong to the "Friends of Cohesion", a group of 17 states that wants to protect regional development and farm funding in the next budget, putting them at odds with "frugal" net contributors that want across-the-board cuts. Rapporteur reported that frugal leaders have been irked at the idea of paying more into cohesion funds while those same countries opt out of the next Ukraine loan.