22nd Mar 2018


Orban's EU funds gamble

  • Viktor Orban (r) seems to be tweaking the nose of the EU Commission - and getting away with it, from rejecting migration quotas to misusing EU funds (Photo:

The European Union is facing its most comprehensive budget framework reform ever, which would entail not only binding the withdrawal of structural and cohesion funds to an increasing number of more rigorous requirements - but also tying payments from the EU budget to political prerequisites.

Hungary paid attention when German chancellor Angela Merkel gave a speech in the Bundestag recently, indicating that the withdrawal of structural funds should be bound to participation in the EU's migration policy.

  • The government's campaign against the Hungarian-born billionaire George Soros has been accused of stoking anti-semitism (Photo: Lydia Gall/Human Rights Watch)

Although Merkel had previously firmly refused the thought of any sanctions against reluctant member states, with time Berlin also came to adopt the viewpoint that 'solidarity is not a one-way street: it is at least a two-way one, or there is no solidarity'.

Merkel's idea of binding together migration and structural funds is a gift to Viktor Orban, who is getting ready for a general election after having already fought Brussels for the past eight years.

The Hungarian prime minister has said "migration is behind the attacks on Hungary, 'everything else does not matter'".

Therefore, he evaluates the European Parliament's LIBE report being prepared on the state of the rule of law in Hungary as an attempt to interfere in Hungarian domestic politics.

Orban has described it as the rearguard action of the left-liberal camp and as a Soros report. He claimed that in fact it is migration, and the encouragement of mandatory quotas, was behind the George Soros-supported report.

It is true that Hungary, the most fervent opponent of the mandatory quotas following the 2015 crisis, has been unwilling to relocate any asylum-seekers from Greece and Italy to its territory.

But at the same time it must be admitted that the mechanism rarely works on the EU level, if at all; the majority of member states only fulfil their obligations half-heartedly.

Thus, binding the withdrawal of EU funding to a set of requirements, the implementation of which not even the council can enforce, is generally not a good idea.

French President Emmanuel Macron has also brought up the idea of binding payments to respecting the rule of law.

This is going to be significant.

In addition to the already known issues (the higher education Lex-CEU law, foreign agent law), the Hungarian government would introduce further restrictions to the operation of civil society organisations and conquer an even larger part of independent media if it were elected for another term.

Morawieczki strategic retreat?

Since the connection between migration and EU funds, which used to be a taboo for Berlin, is now not off limits for Merkel, it is indicative that even Polish Prime Minister Mateusz Morawieczki struck a more restrained tone on this topic at the last EU summit.

The government in Warsaw called binding EU payments to obeying to the principles of the rule of law acceptable - as long as the decision of the latter is based on objective criteria.

Thus, Morawieczki could easily have lied knowing that the objective, EU-level criteria on the rule of law are non-existent; in most cases all member states mean whatever they want under them.

Although the EU's charter of fundamental rights lists the basic rights, these are not codified.

It would be considerably more effective to draft a general rule that applies to all member states, covering all aspects of the EU budget.

More rigorous monitoring

They could, for example, make the mechanisms monitoring the spending of EU funds more rigorous by being more forceful about the independence of justice bodies - although this would not necessary win favour with the Poles wanting to stick to their judicial reforms, as well as the Romanians thinking about similar reforms.

In Hungary, judicial reform is not currently on the agenda, but the share of misappropriated EU funds is the highest in the EU, while the share of cases ending in an indictment after the EU's anti-fraud agency OLAF signals problems is the lowest.

The son-in-law of Viktor Orban, who OLAF says has been involved in the fraudulent use of 13 billion Hungarian forints (€41 million) of EU funds, has become one of the symbols of organised crime.

It has become a systemic issue that the effective use of financial support is the definite responsibility of the beneficiary, and the EU does not have a complete set of criteria regulating what needs to be fulfilled in exchange for the support.

Consequently, it is unsurprising that the Orban government does not want to take part in the work of the European Prosecutor's Office under any circumstances.

The office has been given competences to investigate and indict individuals connected to VAT fraud and the misuse of structural funds.

Therefore, the European Commission and the French-German tandem has to thoroughly weigh in on what form of political conditions they propose.

An approach without proper planning - discriminating against certain groups of countries - would play into the hands of anti-EU populist forces in the 2019 European Parliament election.

The historic defeat in Hodmezovasarhely might encourage the Orban government to finetune its anti-Soros campaign to a certain extent, but it is certain that it will continue to depict the EU as the gravest threat to Hungarian sovereignty.

The Orban regime is going to continue the same, destructive, campaigns undermining the legitimacy of EU institutions - while at the same time it is one of the largest beneficiaries of EU funding.

What makes it even more obvious that this is beyond mere rhetoric is that Fidesz expanded its anti-Western freedom fight to the multilateral level by actually blocking the EU's unified stance on the United Nations Migration Compact.

With Trump taking the United States out of the talks in spectacular fashion, the EU became the leading force of developed countries both symbolically and literally.

In this situation, it would be an especially negative development if Hungary alone would weaken this unified opinion for the negotiations.

Edit Zgut is a foreign policy analyst at Political Capital, a Budapest-based think tank

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