How Orbán’s intransigence has pushed the EU’s patience to breaking point

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Good morning. There are two big stories in Europe today, and both centre on a rather dull roundabout in Brussels. In an adjacent building, the EU’s 27 leaders will try to convince Viktor Orbán to provide vital financial aid to Ukraine. While at the same time, protesting farmers, angry at the EU’s agricultural policies, attempt to drive their tractors on to that same roundabout and get their demands on the leaders’ agenda.

Today, I bring you details of the last-minute efforts to achieve the first aim. And we have a dire warning from Europe’s solar panel industry that half the continent’s production capacity could shutter without an imminent bailout.

At a crossroads

What does Viktor Orbán want? And what might it cost? Those were the questions that the rest of the EU’s leaders and scores of diplomats and officials wrestled with last night, ahead of today’s showdown with the Hungarian prime minister.

Context: The other 26 leaders want to provide Ukraine with €50bn from the EU budget over the next four years. Kyiv says the cash is critical to keep its government running amid Russia’s invasion, especially as US funding is frozen. Orbán vetoed the plan in December. Today’s emergency summit is a final attempt.

Over seared scallops, cod steak and beetroot risotto at a dinner last night, leaders tossed around various suggestions on how to convince him to drop his opposition. The man himself was not there, proving the adage that if you’re not at the table, you’re probably on the menu.

A diplomatic heave on Wednesday morning, offering Hungary “a debate each year” on the continuation of the aid, failed. Budapest said it wasn’t interested unless this included a unanimous vote to keep the money flowing — and an opportunity for a veto. That, the others said, was a red line.

Kaja Kallas, Estonia’s prime minister, ahead of the dinner, spoke of “good cops and bad cops.” Some leaders advocated for incentives for Orbán; others favoured threats.

Kallas confirmed that options include the use of the EU’s Article 7 — which could ultimately strip Hungary of its voting rights — and spoke of Hungary’s economic vulnerabilities, such as those analysed in a document revealed by the Financial Times this week. But taking advantage of either, she stressed, was not anyone’s first choice.

Other officials privately warned that whatever the response, if Orbán upholds his veto, the scale of the frustration that has built up at his intransigence means the fracture could be terminal.

In practice, it would force the other 26 to hastily cobble together multilateral financial commitments to Ukraine outside the EU budget. And that would not only create enormous bad blood, but also a historical precedent.

Still, given Orbán’s predilection for summit showdowns and last minute twists, some are trying to remain optimistic.

“Things are moving. Hopefully in the right direction,” said Kallas. “We are negotiating, which is movement compared to the last time, when he just said ‘no’.”

Chart du jour: Fair share

More than 60 per cent of non-EU citizens living in the EU are employed, and the gap between them and European nationals is narrowing, according to a report published by Eurostat yesterday.

Where the sun don’t shine

Solar-panel makers have warned in a letter to the European Commission that unless they get a bailout within weeks, half of EU production will shut down, write Andy Bounds and Alice Hancock.

Context: The EU has started toughening up on cheap Chinese imports, launching an anti-dumping probe into electric vehicles last year. But the European solar industry has already been overrun with products made in China, which account for more than 90 per cent of the EU’s solar market.

The European Solar Manufacturing Council (ESMC) has been complaining for months that a flood of cheap Chinese panels, plus a build-up of unused stock, has led to heavy losses for producers.

The body, which has almost 80 members, says prices dropped by a third last year.

“In recent months, we have witnessed the loss of 180 [megawatts] of [photovoltaic] module manufacturing capacity,” it said in its letter, seen by the FT. “Without immediate intervention . . . there is a looming danger of forfeiting an additional 3.5 [gigawatts] of operational PV module production capacity.”

The ESMC has called for a public fund to buy up stocks, looser state aid rules to allow more government support for factories, and a quicker rollout of planned measures forcing developers to buy a certain amount of EU-made panels.

And if Brussels doesn’t want to pay more subsidies, it must slap emergency tariffs on imports, ESMC says.

Such safeguards would probably trigger retaliation from China, given its dominance on the European market.

The commission has said it is looking at ways to support the industry.

What to watch today

1. European Council summit, arrivals from 8.30am.

2. Nato member state ambassadors visit Sarajevo.

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