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30th Jan 2023

EU Commission to keep Hungary's EU funds in limbo

  • Prime minister Viktor Orbán and EU Commission president Ursula von der Leyen at a previous meeting in Brussels (Photo: European Commission)
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The EU Commission will continue to propose to suspend some of the EU funds to Hungary as officials think prime minister Viktor Orbán's government has failed to implement all the previously agreed rule of law and anti-corruption measures, according to people familiar with the discussions.

The commission is expected to make the formal decision next Wednesday (30 November), and is poised to conclude that Hungary did not make enough progress on the 17 measures it had agreed with the commission in September.

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Budapest had agreed on 17 measures to fight corruption, which critics say, is the key instrument in how Orbán centralises control in Hungary.

The commission had in September recommended to suspend some €7.5bn in funds, or 65 percent of cohesion funds from the 2021-27 EU budget as part of the so-called conditionality mechanism, a new EU rule, which allows the EU to suspend funds to a member country if those funds are at risk.

EU governments need to decide by 19 December if they want to adopt, reject or amend the commission's proposal by qualified majority.

The EU executive, on the other hand, is expected to approve Hungary's recovery plan, worth €5.8bn.

However, it would only disburse those funds once the Orbán government delivered 27 "super milestones" — measures that the commission hopes will increase the independence of the judiciary in Hungary.

These 27 reform measures will include the 17 commitments asked under the conditionality mechanism.

Nevertheless, a formal approval of the recovery plan is key before the end of the year so that Hungary does not lose 70 percent of the money allocated for it. Member states will also need to give the green light on approving the country's recovery fund.

What more?

Among other things, the commission still wants to reinforce the Integrity Authority, a new body proposed by Hungary that would oversee the spending of EU funds.

The commission would like to see investigations to follow up findings of the authority, and it would like to see further efforts on cementing the independence of the judiciary.

It also wants to a stronger judicial review of the prosecution — one of the issues is the low level of prosecution of high-profile corruption cases –, in addition to reinforcing the powers of a National Judicial Council, a self-regulatory body, and to protect the possibility of asking questions by the European Court of Justice.

The commission seeks to make sure all of the measures are implemented fully, as they depend on each other to be effective.

On Thursday, at a news briefing, Tibor Navracsics, minister in charge of EU funds, said the Hungarian government was committed to meet all requirements, including the ones on judiciary reforms.

Locked in

It remains to be seen what will Budapest's next step be if indeed the EU suspends funds slated for Hungary.

The Orbán government has threatened to veto some key EU priorities, including an €18bn joint aid package for Ukraine and a global deal on a minimum corporate tax rate.

It could try to put pressure on some of the countries with a priority to get the aid to Ukraine, not to vote for the suspension of EU funds.

No way

On Thursday (24 November), the European Parliament adopted a resolution arguing that Hungary has not fulfilled the measures, and that the commission should propose to suspend the funds.

French Green MEP Gwendoline Delbos-Corfield, who is in charge of the file on Hungary, said the "proposed reforms will not solve the dire situation" in the country and "much more will be needed to restore democracy and the rule of law".

"Even if the 17 measures were effective and implemented properly, they will do nothing to address the lack of fundamental rights, media freedom or attacks against minorities," she said in a statement.

Green German MEP Daniel Freund argued that it "will take more than papering over the cracks to restore Hungarian democracy", and that funds should be frozen until the Orbán government "rebuilds the structures of a functioning democratic state".

Hungary challenges new EU loan plan for Ukraine

The European Commission wants to raise some €18bn for Ukraine. But the proposal is already being challenged by Hungary, which remains unhappy it has yet to receive Covid-pandemic recovery funds from Brussels.

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.

EU Commission proposes suspending billions to Hungary

Prime minister Viktor Orbán's government has to implement 27 measures "fully and correctly" before any payment from the €5.8bn recovery fund can be made, or the suspended €7.5bn of cohesion funds can be unblocked.

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