EU starts unprecedented rule-of-law probe against Hungary

"We identified issues that might be breaching rule of law in Hungary and affect the EU budget. Hungary will have to reply to our concerns and propose remedial measures," commission vice-president Věra Jourová said on Wednesday.

Commission officials said that they had identified issues that breach the rule of law, and "that these breaches might affect or seriously risk affecting the EU funds in a sufficiently direct way", which obliges them to launch the probe.

Officials told reporters that they have concerns particularly over how public procurement is done in Hungary, and how it controls and audits EU funds. The EU officials also said the lack of transparency and the lack of independent investigations and prosecution aggravated the problem.

For the past decade, Hungary has ignored repeated concerns raised by the commission— which underpinned the need to launch the procedure, commission officials argued.

What comes next?

The commission on Wednesday wrote to Budapest, notifying it of the launch of the procedure. The Hungarian government now has two months to reply to the EU executive's concerns and detail how it plans to remedy them.

The commission will then have a month to assess the answers, and then the EU member state can have another chance to redress the issues.

If the commission thinks they have not been resolved, it can propose measures, including the suspension of EU money , although a qualified majority of EU governments need to agree to take action. It means support from at least 55 percent of EU countries representing at least 65 percent of the bloc's population.

The procedure could take up to nine months.

The conditionality mechanism has been in force since January 2021 and was aimed at dealing with systematic rule of law concerns over the spending of EU funds.

However, it cannot be used against EU governments for simply steering their country away from democratic standards and EU values. The procedure specifically has to prove a link to the managing of EU funds.

Historic move

The commission and rights campaigners hope this new tool can address systematic rule-of -law concerns, which the executive had struggled to tackle as Orbán managed to dismantle democratic checks and balances over the last decade.

"After 12 years of Viktor Orbán's dismantling of democracy, the EU is finally getting serious. This step is historic," German Green MEP Daniel Freund, who negotiated the mechanism on the parliament's side, said in a statement.

For the first time, the EU is threatening to cut off funds to a member state if it does not put an end to its autocratic course and corruption. This is long overdue. The EU's sponsorship of autocrats will soon come to an end," Freund said.

Implementation of the hard-fought new mechanism was delayed by the commission for months. The European Parliament has threatened to sue the commission if it does not trigger the mechanism.

Hungary and Poland, the two countries under scrutiny for breaching rule of law principles, also challenged the legality of the mechanism at the EU's top court.

However, the European Court of Justice in February dismissed the concerns of Warsaw and Budapest .

The commission sent letters last November to Poland and Hungary over rule-of-law concerns, but only launched this procedure this time against Budapest.

Officials said the high-level corruption and lack of proper fight against corruption in Hungary makes a stronger case against Budapest than Warsaw.

"This is not a political process," a commission official said.

Orbán won a fourth consecutive term at elections earlier this month, after which the commission announced it would soon trigger the rule-of-law mechanism.