Merz Holds EU Budget Hostage as Fico Cries Blackmail

German Chancellor Friedrich Merz told reporters in Berlin on Tuesday that the question of how Ukraine gets financed "naturally belongs within the context of these budget negotiations" — and that Berlin will withhold its signature from the EU's 2028-2034 budget until every one of the 27 member states agrees to chip in. Standing beside him was Hungarian Prime Minister Péter Magyar. Hours later in Bratislava, Slovak Prime Minister Robert Fico called the whole thing "classic blackmail, and I reject it." Two heads of government, one hostage: the common budget, held at gunpoint by the biggest paymaster.

The Ultimatum

The demand is laid out in a letter Merz sent Friday to European Council President António Costa, and the Financial Times reported it on November 9. Berlin's backing for the 2028-2034 Multiannual Financial Framework is conditional on all 27 members sharing the cost of Ukraine's €70bn funding gap for 2027 and its financing from 2028 onwards. "A collective commitment that all of us, without exception, will contribute fairly to closing the gap is an essential prerequisite for resolving this issue and for discussing any further matters, particularly those with financial implications," Merz wrote. Berlin also wants future aid for Kyiv decided by qualified majority rather than unanimity, so no single capital can veto it.

Read that last demand twice. The chancellor wants to strip individual governments of the power to say no to war financing. Whatever you think of the veto, it's the only brake left on the machine.

Who Pays, Who Leans

Germany is the EU's largest net contributor and its approval is required for a budget that needs all 27 signatures. Merz is aiming that weight at four members who have said they won't pay more for Ukraine: Hungary, Slovakia, Bulgaria and Czechia — all net recipients of EU money. It's the second budget threat from Berlin in six weeks, after Merz led a six-nation ultimatum demanding the Commission's nearly €2 trillion plan be cut by hundreds of billions of euros.

So the arithmetic is plain. Cut the spending that touches people's lives; guarantee the spending on the war. Czech Prime Minister Andrej Babiš said after the October summit that "Czechia will not guarantee for it," while Magyar called the budget draft unacceptable in its current form. Hungary, Slovakia and Czechia won exemptions last December from paying interest on the €90bn loan, and Bulgaria has now joined them in signalling it won't contribute to further aid.

Counting the Money

Berlin says it has provided €101bn to Ukraine since February 2022 — the fifth year of the conflict — about €43.3bn civilian and €57.6bn military up to June 30, 2026. Of that, €35.9bn was spent inside Germany, mainly on welfare for Ukrainian refugees, and about €22bn is future pledges. The Kiel Institute's tracker puts bilateral cash actually sent to Ukraine at €31bn–€42bn. Nobody in Berlin has explained why the headline number and the delivered number sit so far apart.

The €90bn Ukraine Support Loan, agreed by EU leaders on December 19 last year, came only after Belgium blocked a larger loan secured on Russia's frozen central bank reserves. It's paid in two €45bn tranches, and Hungary and Slovakia held up the deal for months. By November 5 the Commission had paid out €24.1bn of the 2026 tranche and still owed €20.9bn, which hinges on reforms the Rada has been slow to pass. Commission spokesperson Balazs Ujvari wouldn't promise it would all go out by December 31.

Then came the next bill. Zelenskiy warned in September of a $27bn defence shortfall, about a third of it for drones needed in the first quarter of 2027, and in October asked EU leaders for another €70bn for 2027. European Commission President Ursula von der Leyen accepted the figure at the October 15-16 summit: "Now it is clear that we have a gap of €70 billion that has to be covered." Economy Commissioner Valdis Dombrovskis said Brussels would aim to cover two-thirds — another €45bn — leaving about €25bn for other partners, who have pledged only €4bn for 2027. A second loan raised by joint EU borrowing is "one of the central options," with proposals due later this month.

The Electoral Circus

The Irish presidency's compromise draft of October 10 cut Ukraine's line in the budget from the Commission's proposed €100bn to €89bn. Ireland's Finance Minister Simon Harris offered the establishment line: "To have an honest multi-annual budget for Europe, that has to involve considering the question of the funding for Ukraine. Any other conversation would be an incomplete one." Euronews called Merz's move a gamble that could backfire and tipped Fico as "disruptor-in-chief." Elections next year in Italy and Poland could make a deal harder.

Notice who's absent from every quote. Not one person who'll live with these budget lines for seven years gets a word. The haggling happens between prime ministers and commissioners — Merz asked Costa to put the funding gap on the agenda of the informal summit in Dublin on November 13, and the budget goes to an extraordinary summit in Brussels on November 26-27. Fico's outrage and Merz's ultimatum are two factions of the same apparatus fighting over the invoice. The €210bn of immobilised Russian money at Euroclear stays untouched for now; Belgium still refuses to touch the principal. Meanwhile Lavrov wrote in Kommersant that sanctions had cost Europe "trillions" while Russia had "suffered no significant losses." Every capital in this story is arguing about who signs the cheque. None is asking who gets to refuse it.