Hungary is getting closer to being the first country in the European Union to lose part of the European funds that correspond to it for failing to comply with democratic standards and the rule of law. This Sunday, the community executive has taken a further step and has proposed withdrawing up to a third of the cohesion funds planned for the country led by Viktor Orbán. They are about 7,500 million euros, as explained by the Budget Commissioner, Johannes Hahn. Now it is the rest of the European governments that must decide if this extreme should be reached in the next three months.
Brussels has been in a continuous confrontation with Budapest for years. Some cases have ended up in the Court of Justice of the EU (CJEU) and even activated the famous article 7 of the Treaty on the Functioning of the EU, which ultimately implies the suspension of the right to vote of a member although it has never gone that far.
Conditionality mechanism
But now the Commission is taking a further step in a process that began in April thanks to the so-called “conditionality mechanism”, a tool born with the recovery funds and that directly links the granting of European funds to compliance with the rule of law.
In reality, it is a budgetary mechanism that can be activated when there is a risk of mismanagement of European resources, as is the case in Hungary. The Government of Viktor Orbán aligned itself with that of Mateusz Morawiecki in Poland to prevent the approval of this tool, but in the end it was not possible, since even the CJEU endorsed it.
Be that as it may, from Brussels the European Commission now recommends that governments make the decision to withdraw cohesion funds from Hungary, although it opens the door to a compromise after Budapest has made several promises in recent weeks to avoid it. According to Hahn, Hungary has made significant progress this summer, albeit only promises for now, so Brussels believes governments should give it three months of time before cutting off funding altogether.
This process was triggered by concerns mainly related to public bidding processes, with a high percentage of processes where there is only one candidate. But also, conflicts of interest or suspicions of corruption.
Hungary has promised to create an Anti-Corruption Prosecutor’s Office, but in recent weeks has promised to reduce the number of public tenders in which a single bidder participates or allow the Justice to continue investigating cases, even if the Prosecutor’s Office decides otherwise. And although Brussels admits satisfaction with these latest advances and promises, the problems remain structural.
frozen funds
It should also be remembered that Hungary has not stopped putting spokes in the wheels when the EU has adopted several packages for the invasion of Ukraine, to the point of staying out of the oil embargo. Orbán is one of Putin’s only allies in Europe and this has further strained Budapest’s relationship with Brussels and with the rest of the community partners.
That is also why Hungary has not yet seen or even approved its recovery plan linked to the Next Generation Funds. The European Commission keeps him blocked for his violations of the rule of law and concerns about corruption in the country. A situation that is linked to the fact that the Union as a whole has not yet been able to fulfill the commitment of . Hungary maintains its veto in a decision that requires unanimity in the hope of achieving the same as Poland, whose recovery plan was approved after lifting the veto on this issue. Budapest then took over.
In all this context, the decision of the European Commission must be understood, which, moreover, has been pressured by the European Parliament, after approving a resolution that declares Hungary as an “electoral autocracy”.
In her State of the Union address, the President of the Commission did not make any direct reference to this issue from the point of view of democratic values, but she did make it clear that now was the time to act against corruption within the European Union.
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