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EU to freeze €7.5 billion in EU funds to Hungary over rule of law concerns 

02 December 2022

The NHC has long insisted the European Commission withholds funds for Hungary due to serious rule of law problems and welcomes the proposal to suspend €7.5 billion of EU funds from Hungary over rule of law concerns.

The Commission had given Budapest until 19 November to enforce 17 Rule of Law reforms, including the creating of an anti-corruption body. The Commission said “Hungary failed to adequately implement central aspects of the necessary 17 remedial measures agreed under the general conditionality mechanism by the deadline of 19 November, as it had committed to.”

Hungary is the first country in danger of losing EU funds money due to a new rule of law test, the so-called ‘conditionality mechanism’, which has been in force since 2021. Obtaining funds is linked to good governance. Yet, achieving a qualified majority within the Council to now suspend the funds remains an issue of concern given the recent hints from Budapest to veto other ongoing decisions on additional financial aid to Ukraine, sanctions against Russia and a minimum tax rate for large companies.

Of equal concern is the longevity of any reforms Hungary’s Prime Minister Viktor Orbán may promise to pass in order to unlock the funds now in danger of being suspended. In the words of NHC Committee Member Kees Sterk, who addressed the Dutch news programme ‘Het Nieuwsuur’ on Wednesday:

Orbán holds two thirds of all power in Hungary in his hands. He has the power to change all kinds of legislation on his own. In reality, he can pass laws to meet the conditionality requirements one day, and reserve all changes the next. That means if the Commission is eventually to release the funds, they need to do so piece by piece and step by step, and always under the condition that the political influence on the judiciary or political influence on corruption scandals or investigations disappears.

At the same time, the Commission approved Hungary’s plans to receive €5.8 billion from the Corona recovery fund. Also for these funds, there are conditions that Hungary needs to meet if it wants to be eligible. It must set up an independent anti-corruption watchdog and ensure judicial independence. As Kees Sterk noted, we need to maintain our close monitoring, as “the great danger is that he [Orbán] will now take steps just so he can say ‘I have met the conditions’, that he will then receive the money and subsequently allow corruption again in another way, or continue to control the judiciary.

NHC insists that both the Commission and the Council will remain defenders of the rule of law and will not accept backsliding and corruption in one of the Member States.

For more on NHC’s advocacy on rule of law and the conditionality mechanism: