Merz and Magyar pledge closer ties in Berlin but split over tying the EU budget to Ukraine aid

German Chancellor Friedrich Merz and Hungarian Prime Minister Péter Magyar pledged closer ties on energy, defense and trade at talks in Berlin on Tuesday. But the two leaders split in public over the main issue facing European leaders this month: whether the EU's next seven-year budget should be tied to a new round of financial aid for Ukraine.

Merz used the joint press conference at the Chancellery to repeat a demand he had set out days earlier in a letter to European Council President António Costa. Magyar answered him directly on the same stage. On the same day, the prime ministers of Slovakia and the Czech Republic, meeting in Bratislava, rejected the German position in sharper terms. Slovak Prime Minister Robert Fico called it blackmail.

The clash comes two days before EU leaders gather for an informal summit in Dublin. It also comes about two weeks before a special summit on the budget that Costa's office has set for Nov. 26-27.

The visit#

The Chancellery's public schedule said Merz would receive Magyar for one-on-one talks on European issues, followed by a working lunch on bilateral topics with several ministers and then a joint press conference. Politico reported that Magyar came to Berlin with four ministers and a state secretary.

It was Magyar's second meeting with Merz since he took office, according to the Hungarian news site 24.hu. Magyar's Tisza party won Hungary's April 12 election, ending the long rule of Viktor Orbán. The visit was framed by both sides as a fresh start after years of strained relations between Berlin and Budapest under Orbán.

On Monday evening, Magyar gave a speech in German at an event hosted by the Konrad Adenauer Foundation, which is close to Merz's Christian Democratic Union (CDU), the left-leaning Berlin daily taz reported. He studied in Berlin and Hamburg on the EU's Erasmus program. In the speech, he recalled Hungary's role in 1989, when it opened its border to East Germans fleeing to the West. The Neue Zürcher Zeitung (NZZ) reported that he told the audience Europe could count on Hungary again and promised to be more constructive than his predecessor.

What the two governments agreed on#

The CDU's own summary of the meeting lists the areas where the two leaders said they would work more closely together.

On energy, Germany offered to help Hungary move away from Russian energy imports. The CDU said this would include capacity at German liquefied natural gas (LNG) terminals and German expertise in renewable energy. Deutsche Welle (DW) reported that Magyar welcomed the offer but stressed that prices would be crucial.

On defense, the CDU said the focus would be closer cooperation on air defense and the modernization of armed forces.

On trade, Merz said Germany was Hungary's largest trading partner, DW reported. He welcomed what he called positive signals from Budapest about making it easier for German companies to do business there. Many German firms, especially carmakers, already produce in Hungary.

On EU enlargement, the two leaders backed expanding the union. Merz praised Magyar's commitment to the Western Balkans. According to the Hungarian daily Magyar Nemzet, Merz said accession talks with Montenegro could soon be closed. He said he wanted all negotiating chapters with Ukraine and Moldova opened, and that he hoped this would happen by the end of the year.

"Everyone can see that Russia still only understands the language of strength," Merz said, as quoted by Magyar Nemzet in Hungarian. He said Europeans must be ready to negotiate seriously but also to increase pressure on Russia.

The two governments also announced a German-Hungarian cultural year for 2028. "We want to revive bilateral relations between Hungary and Germany and use the momentum of the fresh start in the government," Merz said, according to the CDU. Magyar said "the stars are very favorable" for closer ties, DW reported.

The dispute over the EU budget#

The disagreement centers on two separate negotiations that both need the unanimous approval of the 27 EU members.

The first is the multiannual financial framework (MFF), the EU's budget for 2028 to 2034. Costa wants a deal by the end of the year, The Guardian reported.

The second is a new loan for Ukraine. Ukrainian President Volodymyr Zelensky has said his country needs about €70 billion to cover next year's budget shortfall. The EU has pledged to find about €45 billion of that, with partners such as Britain, Canada and Japan expected to cover the rest, according to Politico and The Guardian. How the EU share would be raised has not been decided. Euronews reported that new joint EU borrowing has emerged as the leading option.

0

20

40

60

EU (planned)45

Other partners (expected)25

EU (planned)Other partners (expected)

Source: Politico Europe

Show the numbers

Funder	Billions of euros
EU (planned)	45
Other partners (expected)	25

Last year, the EU agreed a €90 billion loan for Ukraine. Hungary, Slovakia and the Czech Republic secured opt-outs from it. That means they are exempt from its guarantees and liabilities, the NZZ reported. All three have indicated they will stay out of the next round. Bulgaria has joined them since the election of Prime Minister Rumen Radev in April, according to The Guardian.

What Merz wrote to Costa#

Merz's letter to Costa was dated Nov. 6, according to the NZZ, which said it had seen a copy. The Guardian and the Financial Times also reported on the letter.

"We must continue to support Ukraine in its fight to defend itself. This is in our shared vital interest," Merz wrote, according to The Guardian. "And yet, bilateral assistance to Ukraine is distributed unevenly and carried mostly by only a few member states."

The letter says a "collective commitment … without exception" is an "essential pre-requisite" for closing Ukraine's funding gap. It says the same applies to "discussing any further matters, particularly those with financial implications," The Guardian reported. "Support for Ukraine is a matter of our indivisible European security, and this must also apply to burden-sharing in providing that support," Merz wrote, as quoted by DW.

The NZZ said the letter implies that Germany would not back the MFF unless the three opt-out countries take part in the new loan. A German government official told The Guardian that financial support for Ukraine from all EU members "is essential in order to successfully complete the MFF." The Guardian also reported that Berlin wants to move decisions on Ukraine funding to qualified-majority voting, so that a single government could not block them.

A spokesperson for Costa confirmed that the letter had been received, without commenting on its details. The spokesperson said Costa would make time for Ukraine at the Dublin meeting.

What Merz said in Berlin#

At the press conference, Merz said Ukraine's financial support must not be reduced because it is a matter of collective European security, according to 24.hu. He said he expected Costa's budget proposal to contain significant changes on this point, "because without changes we will not be able to reach an agreement," Magyar Nemzet reported.

"We must fully incorporate Ukraine policy into the EU budget," Merz said, according to Politico. He said that repeating last year's approach, with opt-outs for some countries, was "not a good option."

Supporting Ukraine "is a shared European responsibility, not the responsibility of individual member states," he said, according to Politico. "That is why the question of how we will finance Ukraine in the coming years, if necessary, naturally belongs within the context of these budget negotiations."

Merz said he had asked Magyar to understand Germany's position. As the largest net contributor to the EU budget and the largest supporter of Ukraine, Germany wants "this fundamental question" settled together, he said, according to the NZZ.

Merz also wants the next budget to shift money toward defense and competitiveness. "Setting new priorities means that earlier priorities must take a back seat," he said, according to the CDU.

How Magyar responded#

Magyar rejected the link between the two issues. "Let me note diplomatically, politely, but firmly, that I do not consider it the right direction to tie the European budget, which is ultimately about the European Union, to another matter in any way," he said, according to 24.hu's Hungarian transcript.

He said the budget is about support for European farmers, students and businesses, the NZZ reported. He said he would not use the word "blackmail." "But I am not sure that this sends the right message," he added, according to the NZZ.

Asked about Fico's remarks, Magyar told reporters: "I do not consider this to be blackmail. So I do not use any such words, because everything is connected to everything in today's world," Euronews reported. He said Hungary could not commit to new joint EU debt because it is already struggling to bring down a high public deficit. "In this regard, this is obviously unacceptable for us for domestic political reasons, but we will negotiate in Berlin, Dublin and Brussels," he said, according to Euronews.

Magyar also objected to the budget proposal as it stands. He said it would make Hungary one of the largest net contributors per person, which 24.hu reported he called unacceptable for a cohesion country. "As a Central European country, Hungary has somewhat different interests," he said, according to Magyar Nemzet. He said Hungary wants funding for farm policy, cohesion policy and national envelopes not to fall significantly.

He argued that Hungary contributes to European security in other ways. He pointed to its spending on guarding the EU's southern external border since the start of the migration crisis. He said this had brought Hungary no reward, only penalties that have cost it €1 billion so far, according to 24.hu. He also cited Hungary's role in NATO forces in the Western Balkans and in the defense of the Baltic states, and said Hungary has taken in many Ukrainian refugees.

Magyar said Hungary would remain a constructive partner. "We will find a solution for the EU budget. I am sure of it," he said, according to Magyar Nemzet. He told reporters he expected the leaders might end up spending Christmas together in talks, adding that this was not meant as a threat, the NZZ reported.

Reactions in Bratislava and Budapest#

In Bratislava, Fico opened a joint session of the Slovak and Czech governments by addressing the letter. "We must respond to this blackmail today. What the German chancellor is doing is a clear case of blackmail, and I reject it," he said, according to the Slovak news agency TASR. He said Slovakia has the same veto power as Germany and is entitled to its own view as a sovereign country.

Czech Prime Minister Andrej Babiš also rejected the demand. He said Merz probably did not realize that the proposed EU budget already sets aside €100 billion for Ukraine, Euronews reported. Those funds would not be available until 2028. Babiš also said the EU must take part in peace talks on Ukraine. "We're paying for all of this," he said, according to TASR.

In Varna, Radev said Bulgaria's high deficit was a reason to exempt it from future credit lines to Ukraine. He said his country would keep supporting Ukraine through other means such as energy flows. "Bulgaria is in no way blocking the decisions at the Council level," he said, according to Euronews.

In Budapest, János Bóka, the parliamentary group leader of Orbán's Fidesz party, said on social media that his party supported Fico and Babiš. He called Merz's letter a "blackmailing letter," according to Magyar Nemzet. Bóka noted that Hungary had been exempted from last year's €90 billion loan thanks to Orbán. He said Magyar had given no real answer in Berlin. He asked whether Hungary would give up its neutrality and become "a party to the Russia-Ukraine war on Germany's side," and how much money the Tisza government plans to give Ukraine.

The wider budget fight#

Slovakia, the Czech Republic, Hungary and Bulgaria all belong to the "Friends of Cohesion," a group of 17 countries that wants to protect cohesion and farm funds in the next budget, Euronews reported. That puts them at odds with the "frugal" countries, which want overall cuts. Germany, the largest net contributor, wants steep cuts in the proposed budget, The Guardian reported.

The NZZ noted that Merz is also under pressure at home. Parties that want to end German aid to Ukraine have gained in recent state elections. The newspaper reported that voices questioning the government's Ukraine policy are also growing inside the governing parties. Merz hosted Zelensky in Berlin earlier this month for a summit of the coalition of the willing.

The next steps#

EU leaders meet in Dublin for an informal summit on Thursday and Friday, TASR reported. Costa's spokesperson said Ukraine's financing would also be discussed at the special budget summit on Nov. 26-27. Any new Ukraine loan and the 2028-2034 budget both require unanimity under current rules.

Neither Merz's office nor Magyar's government published a full transcript of the press conference by Tuesday evening. The quotes in this article are taken from news reports in German, Hungarian and English, as cited.

Differing perspectives

Should approval of the EU's 2028-2034 budget be tied to every member state joining new financial aid for Ukraine?

Each position is summarized as its supporters make it, with equal weight and in alphabetical order. A summary is not an endorsement; the evidence for each is weighed in the story above.

• Fidesz opposition in Hungary

  Who holds it: János Bóka and Hungary's opposition Fidesz party

  János Bóka, who leads the Fidesz group in Hungary's parliament, says his party supports Fico and Babiš against what he calls Merz's blackmailing letter. He notes that Hungary was exempted from the previous €90 billion loan thanks to Viktor Orbán. He says Magyar gave no real answer in Berlin and asks whether Hungary will give up its neutrality, how much the Tisza government plans to give Ukraine and how much less EU money Hungary would receive as a result.

  In their words: Magyar Nemzet ↗

• German government

  Who holds it: Chancellor Friedrich Merz and his Christian Democratic Union (CDU)

  Chancellor Friedrich Merz says Europe carries joint responsibility for Ukraine and no single country should be left alone with the task. He says Ukraine policy must be fully reflected in the European budget, so that support is anchored in the next EU budget from 2028. Germany, the largest net contributor and Ukraine's largest backer, argues that last year's opt-outs from the €90 billion loan should not be repeated and that new priorities such as defense mean older ones must take a back seat.

  In their words: CDU Deutschlands ↗

• Hungarian government

  Who holds it: Prime Minister Péter Magyar and Hungary's Tisza-led government

  Prime Minister Péter Magyar says he does not consider it the right direction to tie the European budget to another matter in any way, though he avoids calling it blackmail. He says Hungary wants farm, cohesion and national funding not to fall significantly, and that the current proposal would make Hungary one of the largest net contributors per person. He points to Hungary's spending on guarding the EU's external border and says Hungary will negotiate constructively.

  In their words: 24.hu ↗

• Slovak and Czech governments

  Who holds it: Slovak Prime Minister Robert Fico and Czech Prime Minister Andrej Babiš

  Slovak Prime Minister Robert Fico calls the German chancellor's demand a clear case of blackmail and says he rejects it. He says Slovakia has the same veto power as Germany and is entitled to its own opinion as a sovereign country. Czech Prime Minister Andrej Babiš also rejects the threats. He says Europeans already pay for the war directly and through energy prices, and that the EU must take part in peace negotiations rather than sit in the corner.

  In their words: TASR ↗

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