“No oil. No money.” Hungarian Prime Minister Viktor Orban continues to take a hard line on dropping his veto on the disbursement of the €90bn EU loan agreed in December, as Brussels comes up with a face saving solution to end the impasse.

The EU has hopes to break a deadlock with Hungary, which has vetoed approval of the loan after its Russian oil supplies were cut off following a drone attack on the Druzhba pipeline in January. Kyiv has blamed Russia for the outage. Budapest has blamed Kyiv.

Repairs are going slowly and Ukrainian President Volodymyr Zelenskiy said they will take 1-2 months. Infuriated, Orban has reneged on a promise to approve the €90bn loan and is using it as leverage to get oil flows restarted. Orban has also blocked the passage of the twentieth sanctions package that was supposed to be adopted on the fourth anniversary of the start of the war.

As bne IntelliNews reported, the EU’s attempt to continue funding Ukraine after the Trump administration pulled out last year has turned into a fiasco. Without the loan, Kyiv is running out of money fast. If the loan is not approved soon, Ukraine could face a macroeconomic collapse, possibly as soon as April. At the summit this week, the Nordic countries are now suggesting making a stopgap, but highly unpopular, €30bn bilateral loan to tide Kyiv over to September and buy more time to put a more permanent solution into place.

Caught in the middle, the European Commission (EC) executive has been trying to find a compromise. Kyiv has now agreed to accept EU help in the repairs of Druzhba oil, potentially restoring Russian crude flows to Hungary and Slovakia much sooner.

European Commission President Ursula von der Leyen and European Council President António Costa said that “the Ukrainians have welcomed and accepted” an offer of “technical support and funding” to repair the damaged pipeline, two days before EU leaders meet in Brussels for critical talks.

The development gives Orban a way to lift his veto on the €90bn package for Ukraine and save face. Orban faces a general election in April and has made Ukraine a central plank of his platform. In a video posted after the EU announcement, he reiterated his position, saying “if there is no oil, there is no money” for Ukraine.

EU officials said Brussels believes Orban is seeking an off-ramp from the standoff, Politico reports. A diplomat familiar with Hungary’s position indicated there may be room for compromise ahead of this week’s EU summit, citing movement from both Brussels and Ukrainian President Volodymyr Zelenskiy.

Zelenskiy has resisted repairing the pipeline, arguing it would benefit Moscow financially and expose infrastructure to repeated Russian attacks. He also criticised pressure from EU partners, accusing them of “blackmail” over the issue.

In a letter to von der Leyen and Costa, Zelenskiy confirmed a shift in Kyiv’s stance, writing: “We are undertaking all possible efforts to repair the damage and restore operations” of the pipeline. He added: “Ukraine is a reliable energy partner for the EU and honours fully its commitments.”

Cracks in EU unity widen

The row comes as cracks in the EU unity on its Russian policy become wider. Belgian Prime Minister Bart De Wever caused a storm this week after he called for the EU to restart relations with Russia, end sanctions and restart the import of cheap Russian energy. “There is no other option,” De Wever said, acknowledging the economic boomerang effect of sanctions on the EU’s economy.

De Wever’s comments after French President Emmanuel Macron also said last month that it was time to restart diplomatic relations with Russia and was later joined by Italy’s Prime Minister Giorgia Meloni and German Chancellor Friedrich Merz, as the situation deteriorates. Europe was already in a gas crisis in February after this winter’s big freeze drained EU gas storage tanks. That crisis will be compounded this summer, after Qatar shut down its LNG production shortly after the start of Operation Epic Fury on February 28 that has doubled gas prices.

Despite talk of banning it, Europe remains hooked on Russian gas and imported Russia’s entire production of LNG in February.

The pressure on the von der Leyen is mounting who has already faced down two votes of no-confidence last year. Former EU foreign policy chief Josep Borrell added his voice to the criticism this week saying the EU is losing credibility. He slammed von der Leyen for selective policies and “bias toward the US and Israel.”

“The EU is losing credibility because it is not pushing back against the US,” Borrell said on March 17.

"Ursula von der Leyen is incapable of standing up to Washington. She is systematically biased when it comes to the USA and Israel, despite Europe suffering consequences in terms of energy prices, while Trump boasts that it is good for the United States because they are an oil exporter," Borrell added, noting that Brussels "loses credibility by selectively applying international norms."

He criticized the bloc’s passive stance on the Iran war and a trade deal with Washington. Borrell accused EU leaders of “weak and selective policies” that let Washington act with impunity and damage Europe’s interests.

Borrell has repeatedly criticized Israel’s actions in Gaza but more recently has increasingly targeted the European Commission executive. Von der Leyen has “continued to overstep her powers” in foreign policy, which the bloc’s founding treaties “clearly state” is not within her competence.

He accused her of being “systematically biased in favor of the US and Israel,” adding that Europe is “suffering from the consequences” in terms of high energy prices, while US President Donald Trump openly “gloats” that the situation benefits the US “because they are oil exporters.”

The EU still has not ratified an EU-US trade deal negotiated by von der Leyen last March that included a lopsided 15% tariff on EU exports to the US and a €750bn energy deal that analysts called “delusional.”

“The deal was unfair from the beginning,” he said. “They imposed 15% tariffs on us and we reduced ours on them,” Borrell said.