The European Commission wants to withhold 7.5 billion euros in payments to Hungary because of alleged corruption and rule of law violations, Budget Commissioner Johannes Hahn said on September 18.

“Today’s decision is a clear demonstration of the Commission’s resolve to protect the EU budget, and to use all tools at our disposal to ensure this important objective,”

said Hahn.

Various EU bodies have accused Viktor Orban of dismantling democracy in Hungary as well as overlooking pervasive corruption and disregarding the rule of law. This is the first time the commission has attempted to take the step of cutting off funding due to concerns about rule of law problems in a member state.

Commission President Ursula von der Leyen started the process of restricting funding in April of this year by using a rule of law mechanism – also dubbed conditionality mechanism – that was implemented in 2021 to ensure that EU members adhere to the bloc’s general principles. A key condition for drawing the mechanism is the conviction that EU funds are being misused.

Hungary has shown some willingness to tackle the problem, including announcing an independent authority to monitor the use of EU funds. Budapest might still avoid the freezing of its funds if it eliminates the reasons that prompted the proposal before the expiration of the deadline. The EU Commission has said this might work, but needs to be implemented properly.

The freezing of funds must now be approved within one month by a qualified majority of the Member States. However, by member states’ decision, the deadline can be extended for another two months. In order to block the funds, a majority of 15 EU countries representing 65 percent of the EU’s population would have to approve the plan. How did the EU states react?

Poland supports Hungary

Warsaw assured on September 18 that it would oppose “any move” by Brussels to deprive Hungary of the 7.5 billion euros of European funding.

“Poland will strongly oppose any move by the European institutions to deprive a member country, in this case Hungary, of funds in an absolutely unauthorized manner,” declared Polish Prime Minister Mateusz Morawiecki to the press.

The head of the Polish nationalist-populist government, also in conflict with Brussels, which accuses him of not respecting the rule of law, recalled that his Hungarian counterpart and ally Viktor Orban had already prepared “a plan for agreement with the European Commission.”

Hungary plays role in Italian election campaign

For Italian far-right leader Giorgia Meloni, tipped for victory in the September 25 general election in Italy, there is an issue of sovereignty here, which sooner or later will have to be addressed. “European decision-making bodies are governing bodies,” she explained on September 18. “We say that sovereignty belongs to the people and manifests itself in parliamentary choices. It is a debate that we have to conduct politely, and this does not mean leaving the EU, but giving correctives.”

Meloni clarified further, “Orban will make his choices, but I do not do what Orban says, I only have the Italian national interest in mind.” However, “I do not agree with what the EU is doing with Hungary. We are in the midst of a war against the West. We are not interested in splitting Europe, but in uniting Europe more strongly against its adversaries. At the UN assembly, Hungary did not vote with Russia, but with Europe. And Poland is in the front line of the clash with Russia, and is taking on refugees from Ukraine.”

Meloni is campaigning for the election as part of a right-wing coalition that includes Matteo Salvini’s far-right League party and Silvio Berlusconi’s Forza Italia. The last polls published before a pre-election blackout put the alliance on course to take 46 percent of the vote, well ahead of its rivals.

The leader of the Democratic Party  (Partito Democratico/PD) Enrico Letta sharply emphasized his distance to the center-right alliance. “We do not want an Italy that binds itself to Hungary as Salvini today proposed to do,” he explained on. “We do not want an Italy that winks at Orban and Putin, we want an Italy that is in the heart of Europe and is faithful to its alliances.”

Slovakia and Croatia prefer settlement

The European Commission acts as agreed by the EU member states when it approves the EU budget for seven years, stated Slovakian Prime Minister Eduard Heger on the Commission’s proposal. Heger pointed out that, when approving the EU budget, the conditionality of the rule of law was adopted to help combat the abuse of EU funds in member states. “This is, after all, a long-term priority for my government. Slovakia knows very well from its own experience in the days of former governments what it means to steal EU funds,” he said.

He also noted that communication between Hungary and the EU Commission on the set of measures that Hungary is prepared to take to strengthen structures for protecting EU funds is very intense at present. Consequently, there is no need to suspend Hungary’s drawdown of the funds. “Of course, this is the preferred scenario,” he stated.

According to him, the proposal cannot be vetoed. Heger recalled that a qualified majority of EU member states will decide on the final version of the proposal after the expiry of the one-month period. Slovakia is ready to support the extension for another two months in order to give Hungary more time to negotiate, Heger said.

“Croatia supports all mechanisms for the protection of the rule of law, including this one on conditionality,” Andreja Metelko Zgombić , Croatia’s State Secretray for Europe, said in Brussels, where she attended a meeting of the General Affairs Council on September 20. She would like Brussels and Budapest to settle their dispute through agreement. Budapest could avoid sanctions if it eliminated the reasons that prompted this proposal in due time. “We were glad to hear that the Commission and Hungary have agreed on a time frame to address this matter, which might last two months at most, and that there is room for agreement. We would like to see these preventive mechanisms work and achieve their purpose,” Metelko Zgombić said.

Romanian President Iohannis: “Any drastic measure must be well-discussed and well-founded”

With regard to the proposal, “Romania’s perspective is that any drastic measure must be well-discussed and well-founded,” Romanian President Klaus Iohannis said on September 20.  

“My hope … is still that communication channels between Brussels and Budapest and solutions to these problems are found, because otherwise fronts are hardening, the dissent increases – and I don’t think anyone wants new crises to occur inside the European Union that simply cannot bring anything good. I hope to continue on the path of dialogue on this topic as well,” Iohannis said in New York.

Austria doesn’t want compromises on rule of law

Austrian European Affairs Minister Karoline Edtstadler (Austrian People’s Party, ÖVP) took a wait-and-see approach after the EU Commission’s proposal. Budapest has already presented reform steps and a plan, Edtstadler said on September 20 before the meeting with her EU counterparts in Brussels. Now, she said, it is a matter of how the Czech presidency deals with the EU Commission’s idea. “What is important to me is that there must be no compromise on the rule of law,” Edtstadler further stressed. There is a “clear procedure”, the Austrian People’s Party minister said, adding that “everyone should also be given the chance to present their ideas and concepts in this procedure and to return to the path of the rule of law.” During the same meeting she said she would also hold talks with Hungarian Justice Minister Judit Varga

And what does Hungary say?

“The summer was a very constructive and solution-oriented period and that’s why Hungary proposed 17 measures, which are capable of remedying all the concerns within the conditionality procedure, and this was also approved by the European Commission on Sunday,” Hungarian Minister of Justice, Judit Varga said on September 20 in Brussels. “So Hungary is now fully committed to implement these measures,” she added, arriving at the General Affairs Council in Brussels.

Varga said Hungary should have time until mid-November, as the country has “to set up new institutions, for that you have to hire new personnel”. She also pointed out that legislation was required and asked the other member states to be tolerant, positive and constructive.

The 17 Hungarian proposals focus mainly on the control of tenders and the use of EU funds, including the creation of an independent authority that would oversee the application of the rules for the use of EU money.

Hungary will also reduce the proportion of tenders with only one bidder, and the government promises to make it easier for SMEs to participate in tenders, and to cooperate more closely with OLAF, the European anti-fraud office.

On September 20, proposed legislation to address some of the EU’s allegations of corruption was presented to Hungary’s lawmakers.

The proposed measure would set controls on the activities of politicians who have taken seats on foundations’ boards of trustees and would require Hungarian officials to cooperate more widely with OLAF.

The new proposals were first announced on the Hungarian Parliament’s website late on September 19. Prime Minister Viktor Orban’s government has announced that another legislative proposal is set to be presented on September 23.

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