No Ukraine Aid Deal, No EU Budget: Merz Threatens to Block Funding

German Chancellor Friedrich Merz has threatened to block the European Union's next seven-year budget unless all member states agree to share the cost of further financial support for Ukraine, prompting accusations of "blackmail" from Slovakia and resistance from three other governments.

In a letter to European Council President António Costa, Merz said a collective commitment to financing Kyiv was an "essential prerequisite" for resolving Ukraine's funding shortfall and discussing other financial matters. He argued that assistance had been distributed unevenly, leaving a small group of countries to shoulder most of the cost.

"We must continue to support Ukraine in its fight to defend itself. This is in our shared vital interest," Merz wrote, adding that all member states should contribute to a sustainable funding arrangement beyond 2027.

The intervention comes as Ukraine faces a projected €70 billion budget shortfall next year. The EU has pledged to cover around €45 billion, with the remainder expected from international partners, including Britain and Canada. A new round of joint borrowing has emerged as the leading option, on top of an existing €90 billion support loan agreed for 2026 and 2027.

Fico threatens veto as four countries reject new funding

Slovakia, the Czech Republic, Hungary and Bulgaria have all signalled they will not participate in another financing arrangement for Kyiv. The first three countries previously opted out of the €90 billion loan.

Slovak Prime Minister Robert Fico accused Merz of using Germany's influence to pressure governments into accepting his demands, threatening to block the budget in response.

"What the federal chancellor is doing is a textbook case of blackmail, and I reject it," Fico said on Tuesday, speaking alongside Czech Prime Minister Andrej Babiš in Bratislava. "We have the same veto power as the German federal chancellor."

Babiš questioned the need for Merz's intervention, pointing out that the proposed long-term budget already earmarks €100 billion for Ukraine. Those funds would not become available until 2028, however, leaving Kyiv facing an immediate financing gap.

Hungarian Prime Minister Péter Magyar took a different approach after meeting Merz in Berlin, rejecting the link between Ukraine aid and the EU budget without adopting Fico's accusation of blackmail. Hungary could not commit to additional European borrowing while struggling to rein in its public deficit, he said.

Bulgarian Prime Minister Rumen Radev cited similar fiscal concerns, saying Sofia would continue supporting Ukraine through other channels, including energy supplies.

Ukraine funding dispute spills into wider budget negotiations

The confrontation comes as EU governments prepare to negotiate the bloc's 2028-2034 Multiannual Financial Framework (MFF). The four countries opposing further Ukraine financing belong to the Friends of Cohesion group, which wants to protect regional development and agricultural funding.

Germany, the EU's largest net contributor, is pushing for substantial cuts to the next budget while opposing generous allocations to countries unwilling to contribute to Ukraine's financial needs. Berlin is also seeking to replace unanimity with qualified-majority voting on Ukraine funding, limiting the ability of individual governments to block decisions.

Costa is expected to make room for discussions on Ukraine at an informal European Council meeting in Dublin this week. A dedicated summit on the next EU budget is scheduled for November 26-27, with the European Council president aiming to secure an agreement by the end of the year.