On Thursday, the European Commission (EC) decided to withhold all $23.3 billion of Hungary’s cohesion funds for “currently not fulfilling the horizontal enabling condition” on the European Union (EU) Charter of Fundamental Rights relating to judicial independence, academic freedom, the right to asylum, and LGBTQI rights.
The EC contended that Budapest’s child-protection law, as well as its lack of commitment to academic freedom and asylum seekers, “have a concrete and direct impact on the compliance with the Charter.” Nevertheless, it stressed that it is “open to further dialogue” and “ready to work together closely” with Hungary.
Wow. @EU_Commission now moves to block all (!) 22 bn euros in cohesion funds for #Hungary. Same reason as vis-a-vis Poland: #Orban gvt. not adhering to Charter of Fundamental Rights. #RuleofLaw @daniel_freund @moritzkoerner @katarinabarley
— Markus Becker (@MarkusBecker) December 23, 2022
The EU cohesion funds for 2021-2027 were allocated for programmes such as education for disadvantaged children, rail transport, internet access, and assistance for regions impacted by coal plant closures. The funds are meant to balance the standards of living between the richest and poorest members of the bloc, and are given as reimbursements for spending on goals agreed upon by individual governments.
“Cohesion investments will help transform Hungary into a fairer, greener, smarter and more territorially balanced economy and society,” EU Commissioner for Cohesion and Reforms Elisa Ferreira remarked, further noting, “However, these investments can only be effective if accompanied by the appropriate institutional and legal environment and if implemented in line with the EU’s rules and values.”
The decision was made after the EC and Hungary signed a Partnership Agreement with a detailed roadmap on how to tackle challenges like transparency in public procurement, corruption, and fraud and conflict of interest through the implementation of 11 national programmes.
Also, the EC considers that the horizontal enabling condition on the Charter of Fundamental Rights is not yet fulfilled.
— Elisa Ferreira (@ElisaFerreiraEC) December 22, 2022
This means that the EC cannot reimburse expenditure. We'll keep working w/🇭🇺 authorities to overcome this situation.
More 👉https://t.co/I3Mncsl7Ux
3/3 pic.twitter.com/FeC8CnS1xa
However, Hungarian EU Affairs Minister Tibor Navracsics appeared to be positive on Thursday, claiming to have “signed all agreements with the European Commission that enables us to access EU funds.” He made no mention of issues related to the EU Charter.
Inflation in the eastern European country has surged to 26%. The Hungarian central bank has warned that inflation could remain high as 15-18% next year, demanding that the government remove price caps on fuel, food, and mortgages.
Securing additional funds will be a complicated ordeal, given its reluctance to fulfil the 27 rule of law reforms recommended by the bloc. The bloc has often raised concern about the country’s democratic backsliding, particularly on issues such as LGBTQI rights, media freedoms, judicial independence, and protection of academics and non-governmental organisations.
The EC first recommended freezing $7.8 billion in funds to Hungary under its cohesion policy for failing to “adequately implement central aspects” of the 17 reforms it agreed to fulfil by the 19 November deadline.
European Commissioner for Budget and Administration Johannes Hahn stressed that these issues, mainly related to rule-of-law and combating corruption, would have a “horizontal effect,” because, if they do not work, it would weaken the entire budgetary protection.
Little doubt, that Viktor Orban is the most expensive Prime Minister in the EU.
— Daniel Freund (@daniel_freund) December 23, 2022
First, he makes EU billions disappear in corruption.
Now, he's losing EU billions because unwillingness to comply with fundamental rights. pic.twitter.com/UnRWHIgHAg
In addition, the Commission proposed adopting the $6 billion post-pandemic Recovery and Resilience Plan (RRP), subject to the “full and effective” implementation of the 27 “super milestones,” including the 17 previous ones that Budapest had agreed to related to judicial independence.
“The ‘essential milestones’ must all be met in full before Hungary can submit its payment request. […] In short: no funds will flow until the ‘essential milestones' are properly implemented,” Executive Vice-President Valdis Dombrovskis stressed.
Many European Parliament members accused Hungary of blackmailing the bloc by blocking the $18 billion fund for Ukraine and also the minimum tax rate. However, in a quick turn of events, Hungary approved the EU’s $19 billion aid package for Ukraine last week after the bloc agreed to reduce the amount of recovery funds it has blocked Budapest from accessing over rule of law concerns from $7.8 billion to $6.65 billion.
Furthermore, the Hungarian parliament postponed its vote on the accession protocols of Sweden and Finland to join the North Atlantic Treaty Organization.
2/2 Creating a new European Parliament, consisting of national delegates. This guarantees greater oversight, accountability and credibility. Give control back to the Member States! #draintheswamp #pressconference
— Orbán Viktor (@PM_ViktorOrban) December 22, 2022
While speaking with reporters on Wednesday, Hungarian Prime Minister (PM) Viktor Orbán called for the dissolution of the European Parliament (EP) over its recent corruption scandal, wherein a Belgian judge charged and detained five prominent Europeans, including a vice president of the EP and a Member of European Parliament, for illegally receiving money and gifts from Gulf states to influence the parliament.
“The degree to which the reputation of the European Parliament in Hungary has been damaged (by the scandal) is easy to answer: not at all, because it couldn’t have been any lower,” Orbán emphasised. Using a phrase of former United States President Donald Trump, he asserted that it is time to “drain the swamp” in Brussels.
To this end, Orbán recommended establishing a new EP with national delegates. “This guarantees greater oversight, accountability and credibility. Give control back to the Member States!” he underlined.
Echoing Orbán, Polish PM Mateusz Morawiecki also declared that he and his Italian counterpart Giorgia Meloni want to restore the bloc “by returning to its ideological roots.”
“A Europe of homelands instead of a European superstate - we would probably both subscribe to such a demand. Poles and Italians are fed up with the dictates of European bureaucracy and want real democracy,” he asserted.
Hungary’s “child-protection law, serious risks to academic freedom and the right to asylum” still hold up EU cash. This will elevate tensions between Budapest and Brussels again for sure. https://t.co/5HbzcZsFwn
— Marton Dunai (@mdunai) December 22, 2022
Orbán has also been at odds with the bloc regarding its sanctions policy against Russia, which is one of Hungary’s closest allies, over the Ukraine war, claiming that the sanctions have proven to be ineffective and caused harm more to European economies. In this regard, he stated on Wednesday that “if it were up to us, there would not be a sanctions policy.” Though he said that Hungary would not support any more sanctions passages against Russia, he stressed that it would not block the EU’s sanctions proposals either.
“It is not in our interest to permanently divide the European and Russian economies into two, so we are trying to save what can be saved from our economic cooperation with the Russians,” he noted.