E.U. proposes suspension of $7.5 billion in funding for Hungary

E.U. proposes suspension of $7.5 billion in funding for Hungary

BRUSSELS – The European Commission on Sunday proposed the suspension of billions of dollars in funding for Hungary over concerns about corruption, a first-of-its kind move that could deepen the stand-off between Brussels and Budapest – if it goes ahead.

The commission will ask European Union countries to approve the suspension of 65% of funding from three programs, amounting to roughly $7.5 billion, according to E.U. officials. But the commission seemed to leave the door open for Hungary to make reforms and keep the money in the end.

This is the first time the E.U. is using a new measure aimed at protecting its budget by making funding conditional on certain standards. “Today’s decision is a clear demonstration of the Commission’s resolve to protect the E.U. budget, and to use all tools at our disposal to ensure this important objective,” said Johannes Hahn, commissioner in charge of Budget and Administration said in a statement.

Announcing the possible suspension, Hahn mentioned three problem areas: systematic irregularities in procurement, problems related to the prevention of conflict of interest and issues related to Hungary’s anti-corruption framework. He noted, however, that the Hungarian side has committed to a package of 17 reform measures to address E.U. concerns.

E.U. member states will have a month to decide whether or not to proceed, with the possibility of extending by two months, according to commission. An E.U. official on Wednesday suggested the extension is likely. A qualified majority is required to move forward.

The move comes just days after the European parliament declared the country has become “a hybrid regime of electoral autocracy” under the current government – and after years of acrimony between the E.U. and Hungarian Prime Minister Viktor Orban’s government.

Orban, a self-styled “illiberal democrat” who has been in power since 2010, has a long history of clashing with Brussels over where Hungary – and where the bloc itself – is headed.

In the last decade, he has gradually tightened his grip on Hungarian democracy, reining-in the country’s press, undermining the country’s judiciary and squeezing civil society.

Each step has been greeted with fear and frustration in Brussels, where many officials worry that the erosion of Hungarian democracy undermines the values and unity of the 27-member bloc.

Yet, the E.U. has struggled to respond – and has largely continued to send money.

In 2018, the European Parliament voted to trigger a rule of law probe against Budapest over what it described as “a clear risk of a serious breach” of the democratic principles underpinning the bloc. In 2020, the European parliament approved a new regulation aimed at protecting E.U. funds from misuse in country’s where the rule of law is being undermined.

In April, when Orban won his fourth consecutive term, he celebrated by taunting the E.U. “We won a victory so big that you can see it from the moon, and you can certainly see it from Brussels,” he said.

Not long after, the commission triggered the new measure, which is known as the “conditionality mechanism.”

On Wednesday, E.U. officials stressed that the scope of the mechanism is limited to areas directly linked to the E.U. budget and the financial interests of the E.U. – not necessarily other areas of E.U. concern such as media freedom or LGBTQ rights, despite obvious overlap.

Some diplomats and members of European of Parliament worry the measures don’t go far enough and predict that Hungary will buy time by making symbolic reforms.

“Cutting 7.5 billion Euros for Orban sounds like a lot. But it is not,” wrote Daniel Freund, a German member of European Parliament with the Greens, noting that billions will keep flowing to a “corrupt and authoritarian” system.

The Commission, he said, “is showing Orban easy way out: sham reforms.”

Others see the move as a decent step forward. “Finally, the Commission uses the teeth we gave them”, Petri Sarvamaa, who was the European Parliament’s lead-negotiator for EU’s rule of law conditionality regulation, in a statement on behalf of center-right European People’s Party, or EPP.

The proposed amount “is not peanuts,” Sarvamaa said. “The real question,” he continued, “is how the Commission will ensure that the measures are actually implemented in the Hungarian system and whether the risk of the misuse of EU funds decreases.”

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