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12th Apr 2024

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Hungary's funds showdown in focus This WEEK

  • Prime minister Viktor Orbán is having a showdown with EU institutions, as member states will have to decide whether to suspend funds to Hungary (Photo: Council of the European Union)
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This week will be peak EU politics and decision-making, or — rather — non decision-making. It will be a classic case of intertwined political issues coming together, at the last minute, for a painfully slow and vague possibility of compromise.

On Tuesday (6 December), EU finance and economy ministers are expected to discuss and possibly decide on a whole series of highly political files, with one country tying it all together: Hungary.

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The global minimum tax agreement, and the joint debt to support the €18bn Ukraine financial assistance are on the agenda, despite the threat of veto by Hungary.

Hungary itself is expected to be on the menu, as ministers will have to approve the country's recovery fund and agree to suspend 65 percent of cohesion funds to Hungary by 19 December.

To suspend the funds, a qualified majority of member states need to agree.

There are fears among some governments that a qualified majority to support the suspension is not a given, and and a desire to make sure there are enough countries supporting a suspension, otherwise the so-called rule of law conditionality mechanism — the law which links EU funds and rule of law — could be dead.

The EU Commission proposed, based on this mechanism, last week to suspend 65 percent (around €7.5bn) of EU funds to Hungary over corruption and rule-of-law concerns.

The EU executive approved the country's recovery plan but said it would not disburse any money from the €5.8bn funds unless prime minister Viktor Orbán's government implements a total of 27 reforms to fight corruption and restore judicial independence.

As of last Friday evening, the Czech EU presidency planned to put all four of the intertwined and sensitive issues on the agenda. With some member states being more cautious, decisions are not guaranteed to be taken.

EU governments might ask for more time by asking for a second assessment on the 17 measures that Hungary and commission agreed on in September, and the commission said Budapest did not deliver fully.

Last week's assessment last week was based on what Hungary delivered by 19 November, and member states might want to hear more from the commission.

Based on that, EU countries might lower the 65 percent of funds suspension proposed by the commission, citing a better proportionality.

The four issues — which are not actually related but only pulled together due to political tactics, are unlikely to be taken apart. They are treated now as a package.

Balkan talks

The EU-Western Balkans summit will take place in Tirana, Albania, on Tuesday (6 December), the first one to happen in the Western Balkan region.

The leaders for the EU-27 and six countries in the region are expected to talk about the Russia's invasion of Ukraine, security and fighting foreign interference in the region, and migration.

There has been growing fears over Russia and Turkey expanding its influence in the region, and while the EU governments are reluctant to speed up accession for the countries to the bloc, they want to send a message to the region to stick to the European path.

On Thursday and Friday (8-9 December), EU home affairs and justice ministers will meet in Brussels to discuss allowing into the passport-free Schengen area Croatia, Bulgaria and Romania. Ministers will also talks about migration.

Justice ministers are expected to discuss the fight against impunity regarding crimes committed in connection with Russia's war of aggression against Ukraine, and also asset-recovery and confiscation.

EU ministers on the telecommunications and energy council on Tuesday will give a nod to the artificial intelligence act, a proposal aiming to build the legal framework based on fundamental rights for AI technology within the EU.

Covid impact

In the parliament on Thursday (8 December), the special Covid-19 committee is expected to debate the impact of the pandemic on the mental health of teenagers and children. Experts will explain to MEPs how school closures and remote-learning impacted children and their rights.

MEPs will try to reach a deal with EU governments on Monday on the regulation for deforestation-free products, which would make it obligatory for companies to verify that goods sold in the EU have not been produced on deforested land anywhere in the world.

EU Commission proposes suspending billions to Hungary

Prime minister Viktor Orbán's government has to implement 27 measures "fully and correctly" before any payment from the €5.8bn recovery fund can be made, or the suspended €7.5bn of cohesion funds can be unblocked.

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