Friday

22nd Jan 2021

Opinion

Orban's bluffing on a rule-of-law mechanism - here's why

  • Hungarian prime minister Viktor Orban. 'If there are no rule-of-law or corruption issues in Hungary, as the Budapest government claims, they shouldn't be afraid of this mechanism.' (Photo: Council of the European Union)

Whether strong rule-of-law conditionalities will be attached to the EU's next seven-year budget and the coronavirus recovery package is one of the biggest battles in Brussels at the moment.

In the European Parliament, all major political groups insist that a meaningful rule-of-law mechanism – with the option of suspending EU funds for members states facing a systemic breach of the rule of law – is an indispensable condition to give the green light to the next seven-year budget.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

  • Benedek Jávor: 'I have serious doubts how far Hungarian PM Viktor Orbán would go with this threat' (Photo: Fekete Hajna)

In the Council of member states - under strong pressure from countries potentially subjects of such sanctions - the German EU presidency presented a "compromise" proposal, with several concessions to the opponents.

Hungary and Poland blackmail the European Union with vetoing the budget and/or the recovery package, and Germany seemingly tends to take this threat seriously.

But I have serious doubts how far Hungarian PM Viktor Orbán would go with this threat.

Hungary has been one of the member states most-dependent on EU funds, which represented between two to five percent of the country's yearly GDP already - before the Covid-19 crisis.

Between 2010 and 2019 GDP-growth varied from -1.7 to +4.9 percent, and EU money transfers generated a fair share of this growth.

And the pandemic hit the country more than the European average.

GDP fell by 13.6 percent in the second quarter of 2020, and the expected yearly data is around seven percent.

The deficit in the state budget is already five times bigger then was predicted for the whole year, and might amount to nine-percent of GDP by the end of the year. Consequently, public debt increased by four-percent in the first half of the year, to over 70-percent of GDP.

Even a previous trick of the Orbán government backfired this time.

To intensify GDP-growth in the past years, the government tried to speed up contracting and disbursement of EU funds in the first half of the 2014-2020 period.

Projects in the next three years could still be accounted into the EU funds, but Hungary had already used up 99-percent of EU funds before the Covid-19 crisis, and no substantial sources are left to soften the economic havoc of the pandemic.

Empty coffers

As a result, Hungary desperately needs EU money to keep the economy alive and to buffer the devastating effects of the coronavirus.

And this money should come from the next budget, and the recovery package, as no other sources are left.

Just take a quick look on the amendments Fidesz MEPs tabled to the Recovery and Resilience Facility (RRF) file – the recovery fund's main moneybag – in the European Parliament.

Three elements appear in their amendments.

First, to transfer competencies from the EU Commission to the EU Council as much as possible.

Second, to channel RRF funding to infrastructural projects.

Finally, to shorten the deadlines and to speed up the payments.

The message of those amendments is this: there is no money even for basic infrastructural investments, so RRF funds are planned to be allocated to finance them instead of targeted post-Covid recovery measures, such as saving jobs, giving a helping hand to small and medium-sized enterprises (SMEs) in trouble and restarting the economy in a transformative, green manner.

In contrast with investing in SMEs, innovation or job-saving, infrastructure projects are highly-compatible with corrupt practices, which makes them the perfect channels to finance the always-hungry oligarchs and government politicians.

The scarcity of resources already threatens the very fundaments of Orbán's system, the loyalty of its cronies, and quick RRF payments are essential for the government to feed them.

Bluff, not threat

Hungary's veto is more a bluff than a real threat. Orbán needs the money much more than most of his colleagues in the council.

That's precisely the reason for his blackmailing: he knows very well that a properly functioning rule-of-law mechanism could easily lead to suspension of some of the desperately-awaited EU resources.

The poker player with low cards can throw them on the table or could start to bluff.

Orbán is not the kind of person to give up. And he can easily bluff, as the whole issue is much less critical to the other player in this game of who-blinks-first: the European Union.

For the EU, and for several member states, to get immediate access to EU funds and to launch the recovery programs have higher importance than the rule-of-law issue.

They will blink first, and Orbán wins one more fight with the EU. But all this could be different this time.

As the Hungarian government – despite the aggressive tone they use in communication – is highly and strategically vulnerable in this situation, the EU should stand firmly behind its original rule-of-law proposal.

If there are no rule-of-law or corruption issues in Hungary, as the Budapest government claims, they shouldn't be afraid of this mechanism. And we can set in motion the new budget and the recovery package to support Hungary's struggling economy together.

Suppose Orbán blocks the recovery effort, despite all of this?

That would be an implicit confession about the real situation in the country. And no EU-money should be spent to finance oligarchs and stabilise an illiberal state.

Then let's play this game till the end: most probably the access to EU funds is more urgent to Orbán.

In the meantime, the EU should build a structural alternative to filling Orbán's hands and his oligarchs' pockets with EU funds.

Direct-funding schemes to keep the money flowing to the final recipients (cities, NGOs, SMEs), even in case of suspension of EU funds for the Hungarian government have already been proposed in the European Parliament. City networks have been lobbying for this for years now.

The aces are more in the EU's hands now. Perhaps, now it is time to call the bluff.

Author bio

Benedek Jávor was a Hungarian MEP for the Greens from 2014-2019, and former MP in Hungary, and is now the head of the representation of Budapest in Brussels.

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

Hungary - how the government crippled the media

As president of a news organisation operating across Eurasia, I witnessed the reality of non-independent media in central Asia or in Vladimir Putin's Russia. Yet this trend is now becoming more commonplace in parts of the European Union.

Orban move evicting Budapest university 'unlawful'

While the ECJ ruling says the Orban government's legislation breaks EU law, it does not change the facts on the ground, which has seen the university already leave Budapest for Vienna.

Deal reached on linking EU funds to rule of law

The deal means MEPs and the German EU presidency unblocked a major political hurdle to agreeing on the €1.8 trillion long-term EU budget and coronavirus recovery package.

Rule-of-law deal: major step for Europe of values

At the very moment when an incumbent president across the Atlantic was carrying out staggering attacks on the foundations of democracy, the European Parliament obtained a historic agreement to protect the rule of law in Europe.

News in Brief

  1. Hungary buys Russia's Sputnik V vaccine
  2. Netherlands imposes curfew to halt new corona variant
  3. Green NGO fails to stop Europe's biggest gas burner
  4. Swedish minister reminds Europe of Russia's war
  5. Spain: Jesuit order apologises for decades of sexual abuse
  6. NGOs urge Borrell to address Egypt rights 'crisis'
  7. EU conflict-area education aid favours boys
  8. EU told to avoid hydrogen in building renovations

Column

BioNTech: Stop talking about their 'migration background'

I understand that the German-Turkish community - often subjected to condescension in Germany - celebrated the story. Uğur Şahin and Özlem Türecki represent scientific excellence and business success at the highest level.

Italy's return to statism spells trouble for the eurozone

There are profound questions about whether the windfall of cash from the EU coronavirus recovery fund will truly help Italy recover or whether it will cause more problems than it solves, for Rome and the rest of the eurozone.

Stakeholders' Highlights

  1. UNESDAEU Code of Conduct can showcase PPPs delivering healthier more sustainable society
  2. CESIKlaus Heeger and Romain Wolff re-elected Secretary General and President of independent trade unions in Europe (CESI)
  3. Nordic Council of MinistersWomen benefit in the digitalised labour market
  4. Nordic Council of MinistersReport: The prevalence of men who use internet forums characterised by misogyny
  5. Nordic Council of MinistersJoin the Nordic climate debate on 17 November!
  6. UNESDAMaking healthier diets the easy choice

Latest News

  1. EU leaders keep open borders, despite new corona variant risk
  2. EU and Cuba appeal for Biden to open up
  3. Portugal's EU presidency marks return of corporate sponsors
  4. MEPs chide Portugal and Council in EU prosecutor dispute
  5. EU warns UK to be 'very careful' in diplomatic status row
  6. A digital euro - could it happen?
  7. US returns to climate deal and WHO, as EU 'rejoices'
  8. Big tech: From Trump's best friend to censorship machine?

Join EUobserver

Support quality EU news

Join us