Brussels could stop all funding for Hungary if its veto on Ukraine aid is not lifted, according to a document seen by the paper

The European Union is preparing to cut off all funding for Budapest in a bid to hurt “jobs and growth” if Prime Minister Viktor Orban continues to block aid to Ukraine, the Financial Times reported on Sunday, citing a strategy document from EU officials.

Last month, Hungary vetoed an additional €50 billion ($55 billion) in EU funding for Ukraine, with Orban vowing to put the brakes on any future financial package at an emergency summit last week.

According to the report, the EU is now planning to intentionally target Hungary’s economic vulnerabilities, jeopardize its currency, and undermine investor confidence in Budapest.

“In the case of no agreement in the February 1 [summit], other heads of state and government would publicly declare that in the light of the unconstructive behavior of the Hungarian PM… they cannot imagine that EU funds” will be provided to Budapest, the Financial Times quoted the document as saying.

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It further stated that without the funding, “financial markets and European and international companies might be less interested to invest in Hungary.” This could “quickly trigger a further increase of the cost of funding of the public deficit and a drop in the currency,” according to the report.

Three EU diplomats told the FT that many countries support the plan. “The stakes are high. It is blackmail,” according to one of the diplomats.

Hungarian EU Minister Janos Boka commented by saying that although he is not aware of the financial threat, Hungary would not “give in to pressure.”

“Hungary does not establish a connection between support for Ukraine and access to EU funds, and rejects other parties doing so,” he said. “Hungary has and will continue to participate constructively in the negotiations.”

He stressed the importance of EU unity being “preserved” and emphasized that Hungary is willing to “make compromises” as long as the country’s “vital interests” are not affected.

A spokesperson for the Council of the EU declined to comment.