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27th Jan 2023

EU Commission mulls 70% cut to Hungary's EU funds

  • Hungary's justice minister Judit Varja (l) met with EU budget commissioner Johannes Hahn last week in Brussels (Photo: European Commission)
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EU budget commissioner Johannes Hahn has proposed that around 70 percent of EU funding envisaged for Hungary be suspended, according to a July document published by the EU Commission.

The commissioner in a note to other commissioners said that "70 percent suspension of commitment" of the programmes from the 2021-27 EU budget are "proportionate" in the case of Hungary where the risk to the EU funds is "very significant".

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The commission launched in April a legal probe under a new EU law that links the disbursement of EU funds to the rule of law overseeing those subsidies.

In his note, Hahn cites "systemic irregularities, deficiencies and weaknesses in public procurement procedures; high rate of single bidding procedures and low intensity of competition" in Hungarian procurement procedures, the "detection, prevention and correction of conflicts of interest", and "limitations to effective investigation and prosecution of alleged criminal activity," in particular high-level corruption cases.

The budget commissioner informs the fellow commissioners that Hungary, in its response, has "not submitted substantiated information regarding the concerns identified with respect to the judicial independence", and only replied partially to concerns.

Since Hahn's note, Hungary submitted a "range of remedial measures" on 21 August. The commission has until 21 September to decide if the latest proposals from Budapest are enough to ease its concerns.

If not, the commission, in a yet unprecedented move, could recommend to the council of EU governments to suspend funding to Hungary.

Last week, Hungary's justice minister Judit Varga met with several commissioners to convince them that prime minister Viktor Orbán government's responses were adequate.

Hungary plans to create an anti-corruption authority to oversee spending of EU funds in a bid to unlock another tranche of money from the Covid-19 recovery fund.

"Orbán is making proposals that will continue to secure him EU funds without really ending the systematic corruption of his friends and family," German Green MEP Daniel Freund said, who participated in creating the new rule-of-law mechanism in 2020.

"The goal must be to restore democracy and the rule of law in Hungary," he added.

Hungary had irregularities in almost 4 percent of its spending of EU funds in 2015-2019, according to the bloc's anti-fraud body Olaf, the highest among the 27 EU countries.

MEPs are expected to adopt on Wednesdaya resolution , saying that Orbán has turned the country into a "hybrid regime of electoral autocracy".

It also calls on the commission to "take immediate action" on Hungary under the mechanism linking EU funds to the rule of law.

Hungary drops sharply in global anti-corruption index

"Covid-19 is not just a health and economic crisis. It is a corruption crisis. And one that we are currently failing to manage," Delia Ferreira Rubio, Transparency International's chair said.

Hungary tries to unblock EU funds with new anti-graft body

Budapest's move is aimed at unblocking EU funds — as Hungary's government is under increasing pressure, from rising inflation and energy prices, coupled with a sinking forint, to come to an agreement with the commission.

EU Commission proposes freezing 65% of funds to Hungary

The freezing, the first time in the EU's history using the conditionality mechanism linking EU subsidies to the respect of the rule of law, would suspend money from the bloc's cohesion funds under the 2021-27 long-term budget.

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