Wednesday

31st Aug 2016

Heckles on 'double standards' as EU freezes Hungary's money

  • Orban - all EU states are equal but some are more equal than others (Photo: consilium.europa.eu)

EU finance ministers on Tuesday (13 March) approved a controversial funding freeze on Hungary under the bloc's new deficit rules, but some countries, led by Austria, say it was a bit harsh after Spain obtained concessions.

"We had a quite long discussion on Spain yesterday and on Hungary today, but it was worth it. The six-pack is working and delivering results," EU economic affairs commissioner Olli Rehn said during a press conference, referring to a package of six EU budget discipline rules.

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The ministers' debate went on two hours longer than planned.

Austria, backed by Britain, Poland and the Czech Republic said the decision to freeze €495 million of EU aid for Hungary's infrastructure projects should be delayed from 1 Januay 2013 until June to give it more time to fix its deficit.

Going into the meeting, Austrian finance minister Maria Fekter also criticised what she called "double standards" and "political" sanctions against Hungary.

Ministers on Monday gave Spain more breathing space on its rule-busting deficit.

Meanwhile, Hungary over the past year has caused a stink in Brussels over laws back home that curb free press and the independence of the central bank and judiciary.

But for their part, Germany and the Netherlands said Spain has committed to €5 billion more in cuts this year, while Hungary, which has broken the EU's budget deficit rule every year since it joined in 2004, is not making any sacrifices.

"For Berlin the deficit rules are sacred," one EU diplomat told this website.

In the end, everybody - except Poland, which abstained - agreed to review the situation on 22 June: if Budapest manages to shave 0.5 percent of GDP off its deficit by the deadline, it will get to keep the EU money.

"We are not lenient and we are not particularly tough with [any given] country. There is no room to be seen as a victim of the system," EU commission spokesman Amadeu Altafaj Tardio said during a press conference earlier on Tuesday.

Everybody is a special case

In a sign that Spain's let-off could open a Pandora's Box, Dutch opposition Labour party MPs on Tuesday threatened to block ratification of the new EU tretry on fiscal discipline unless the Netherlands also gets more time to put its house in order.

The Dutch centre-right coalition government needs Labour to get the pact through because the far-right Freedom Party has already said No.

The Dutch deficit is expected to hit 4.5 percent of GDP this year and it will over €15 billion in cuts to bring it down to the EU's three-percent limit in 2013.

"We are against cutting €15 billion next year. Economists also think this is wrong. It will costs jobs, companies will run into trouble," Labour MP Ronald Plasterk told Reuters.

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