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19th May 2022

EU finally launches rule-of-law probe against Hungary

  • EU Commission chief Ursula von der Leyen announced the political decision to launch the unprecedented probe in Strasbourg (Photo: European Parliament)
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The EU Commission will launch a legal probe against Hungary which links EU funds to the respect of rule of law and could lead to financial penalties, commission president Ursula von der Leyen said on Tuesday (6 April) in the European Parliament.

It is the first time that new rules on rule-of-law conditionality are used against a member state since the legislation came into force in January 2021.

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The commission chief said EU budget commissioner Johannes Hahn on Tuesday informed the Hungarian authorities that a letter on the official launch of the so-called conditionality mechanism will be sent soon. The college of commissioners still needs to take the formal decision.

The EU executive sent letters to Poland and Hungary with questions on judicial independence and corruption last November.

"We have carefully assessed them [the answers], and our conclusion is that we have to move on to the next step," the German commission chief told European lawmakers in Strasbourg.

Von der Leyen did not mention possible action against Poland.

The announcement comes two days after Hungarian nationalist prime minister Viktor Orbán's Fidesz party won a fourth consecutive two-thirds majority in parliament.

The commission has been under pressure to trigger the mechanism over concerns of fraud and corruption regarding the spending of EU funds in Hungary and worries over democratic backsliding.

Poland and Hungary were opposed to adopting the new rules in the first place and later challenged their legality at the EU's top court.

The European Court of Justice gave the green light in February for the commission to link the EU funds to the principle of rule of law if there is a direct link to the use of European subsidies.

After the court's ruling, the commission was seen as dragging its feet because it did not want to launch the mechanism in the midst of Hungary's election campaign, worried it might be seen as interference.

MEPs have even started a procedure to take the commission to court for failure to act, and have kept the pressure on the executive to move to officially take the unprecedented step.

German Green MEP Daniel Freund said that the launching of the mechanism comes too late

"It was a strategic mistake not to trigger the mechanism long before the Hungarian elections. The commission's lack of action on Hungary has shown that wannabe autocrats in other member states can easily follow Orbán's lead and bend the rules of democracy while using EU money for their own benefit," he said in a statement.

What's next?

Commission officials will now send a letter to the Hungarian authorities notifying them of the concerns, to which Budapest will have to come back with answers.

If the commission is not satisfied with the answers by the Orbán government, it could propose sanctions such as suspending EU funds.

The decision to suspend the funds need the support of at least 15 out of 27 member states representing at least 65 percent of the total EU population. The procedure is expected to take months.

In its letter back in November, the executive raised the issue of of systemic deficiencies and weaknesses in public procurement, risks of conflict of interests, ineffective investigation, prosecution or sanctioning of lawbreaking, and deficiencies in the judicial independence.

The commission, for instance, pointed to the lack of transparency in tendering of projects, the creation of private foundations to which public assets have been transferred.

"Risks related to cronyism, favouritism and nepotism in high-level public administration or those arising from the interface between businesses and political actors remain unaddressed," the letter said.

Orbán and his government have been accused of channeling EU funds to his allies, and family.

Parallel procedure

The commission, in a parallel procedure, have also withheld approval of the Covid-19 economic recovery plans of Poland and Hungary because of concerns over corruption and judicial independence.

Poland, which has been seen as edging towards concessions with the commission over its judicial overhaul, has also become a key player when it comes to supporting and advocating for sanctions against Russia.

However, Hungary's Orbán, the closest EU ally to Russian president Vladimir Putin, has called Ukrainian president Volodymyr Zelensky one of his adversaries.

German MEP Manfred Weber, who leads the group for the centre-left European People's Party, once the political home for Orbán, said he was "shocked" by the statements on Zelensky.

"I cannot understand why a European leader is putting himself in opposition to a president who is fighting for his country, [against an] unprovoked aggression from Russia, and defending the European way of life," Weber told reporters in Strasbourg.

Von der Leyen seen dragging heels on Hungary and Poland

Lawmakers vented frustration that the EU Commission might delay action against the nationalist leaderships in Poland and Hungary despite a court victory. Experts on EU affairs sounded a more cautious note.

EU starts unprecedented rule-of-law probe against Hungary

The so-called conditionality mechanism has been invoked, for the first time in EU history, over long-standing concerns of corruption, amid allegations Viktor Orbán's allies syphoned off EU money, and over how Budapest ignored commission concerns.

EU Commission still assessing Hungary's anti-LGBTI law

In response to the EU probe, Hungarian prime minister Viktor Orbán's government called for a referendum on the anti-LGBTI legislation, but it failed to to muster enough votes earlier this month to be valid.

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