The Financial Times reported on Tuesday that the EU is preparing to provide up to €40 billion in new loans to Ukraine by the end of the year, moving forward without US participation.

This decision comes after a G7 plan to use frozen Russian assets to aid Ukraine faltered due to opposition from Hungary, led by Prime Minister Viktor Orbán.

The EU is concerned that Hungary may block the delivery of key safeguards needed for the US to join the frozen asset scheme, prompting Brussels to consider an alternative, unilateral approach.

The new funding aims to support Ukraine's financial stability as it faces a projected $38 billion financing gap in 2025, according to Kiev and the International Monetary Fund (IMF).

The EU's proposal would bypass Hungary's veto by raising funds through an existing aid program that only requires majority support from member states, rather than unanimity.

Read more: US weapons shortage limits Ukraine aid despite available funds

While the original plan, which involved US participation, remains the EU's preferred option, officials are preparing to act alone if Hungary maintains its veto until after the US presidential election in November.

G7 leaders had agreed to provide a $50 billion loan to Ukraine, with the EU and U.S. each contributing $20 billion.

However, the US requires assurances that the frozen Russian assets, mainly held in Europe, will remain secured for future loan repayments.

The EU is now racing to finalize the proposal before the end of the year, as the current financial support package for Ukraine is set to expire.

The plan would include proceeds from frozen Russian assets, which generate approximately €2.5 to €3 billion annually, to help repay the loan.

Brussels hopes that Washington will still contribute, but the EU is prepared to act independently if needed.

Read more: Zelensky dismisses Trump’s Ukraine peace promises as unrealistic

Members of EU call for stripping Hungary of voting rights

In July, EU Parliament members asked that Hungary's right to vote in EU elections be taken away.

Prime Minister Orban "has already caused significant damage by exploiting and abusing the role of the Council Presidency," 63 MEPs said in a letter obtained by Politico and addressed to European Commission President Ursula von der Leyen, European Council President Charles Michel, and European Parliament Chief Roberta Metsola.

Belgium relinquished its rotating EU Council leadership to Hungary on July 1. Ever since, Orban went on what some subbed “peace missions” to Beijing, Moscow, Kiev, and Washington.

The MEPs said that Orban “undertook several diplomatic visits," notably to visit Putin in Russia and Xi Jinping in China, during which he intentionally misrepresented his empowerments,” and called on the parliament to act accordingly.

“This requires real actions, such as suspending Hungary’s voting rights in the Council, since practice has shown that mere verbal condemnations of this situation have no effect,” they added.