7.5 billion are to be lost: how the EU threat is putting pressure on Hungary

The EU Commission wants to withdraw 7.5 billion euros from Hungary because the country violates the principles of the rule of law. This is still a threat because a majority of EU countries would have to agree. But Hungary is already reacting. Is that believable?

It is the first time that the European Commission in Brussels is proposing not to pay out billions of euros because the rule of law does not work in a country. That it would hit Hungary first came as no surprise to anyone in Brussels. Unanimous resolution, no dissenting vote, all 26 commissioners plus President Ursula von der Leyen agreed, reported budget commissioner Johannes Hahn after the commission meeting in the morning.

The unusual time for the meeting had become necessary because of other appointments: On Monday, von der Leyen will attend the Queen’s state funeral, then she will travel to New York for the UN General Assembly.

7.5 billion euros are not to be paid out to Hungary

If the Commission has its way, 7.5 billion euros, which Hungary is actually entitled to from the Community budget, are to be frozen. “We have to assume that EU funds are not adequately protected in Hungary,” reported Budget Commissioner Hahn, an Austrian. It’s about the money of Europe’s taxpayers.

The facts about corruption and nepotism in Hungary are known in Brussels. The EU’s own anti-corruption agency OLAF has meticulously identified them for years. Transfers from the Brussels joint budget seep into dark channels, and often end up officially with friends and family members of Prime Minister Victor Orbán.

Tenders for the lucrative projects funded by the EU, which are worth millions, are often specifically tailored to a specific applicant. For example, in the case of the nationwide installation of new street lamps, it was a company in which Orbán’s son-in-law played a crucial role. Entrepreneurs who are not at least close to the ruling party Fidesz have little chance of being awarded one of the promising contracts.

Hoping for reform

The Commission wants to freeze a third of the funds earmarked for Hungary from the Cohesion Fund. Economically weak regions in Europe are to be supported with subsidies, for example for the expansion of transport systems and energy networks. There is a great need in Hungary.

The Commission is optimistic that even the threat of financial thumbscrews will have an effect on Orban. According to Brussels, the state coffers are empty and some of the expected funding has already been earmarked. In addition, and this made the Orbán critics sit up and take notice in the morning press conference, the commission also sees a willingness to reform on the part of the Hungarian prime minister.

Since the budget cuts were announced a few weeks ago, according to Budget Commissioner Hahn, people in Brussels have had the impression that “Hungary has actually moved”. The commissioner’s optimism is based on Orbán’s announcement that he would respond to criticism from Brussels and set up an anti-corruption agency.

Distrust of the reform movement

“How can you take something like this seriously?” the budget commissioner was asked at the press conference by the correspondent of Nepszava, one of the few newspapers still independent of the ruling party. The correspondent Katalin Halmai emphasized that there is no independence of the courts in her country, Hungary is a country in which “the so-called independence of authorities and institutions is only on paper”.

Budget Commissioner Hahn answered evasively. Recent announcements to address Brussels concerns are “a step in the right direction.” However, he also demanded that the declarations of intent had to result in new laws and measures before the EU was reassured.

Rule of law experts in the European Parliament find the suddenly milder tones from Budapest hardly trustworthy. “What the EU Commission is selling here as a success,” explains Green MP Daniel Freund, is “less impressive on closer inspection.” Orbán can continue to count on around 80 percent of the transfers, which go “further into the country’s corrupt system”. Freund fears that the Hungarian prime minister could still manage to avert the sanctions with bogus reforms by the end of the year.

Specify measures by November

The rule of law mechanism that has been introduced provides that the Hungarian government now has until November to finalize the implementation of the reform measures. The Commission’s threat to freeze 7.5 billion euros is initially just a proposal from the Commission.

In the end, the funding cuts can only be decided by a majority of the member states. At least 15 of the 27 governments in the EU would have to take a decision against Hungary. And these 15 would have to represent at least 65 percent of the population of the European Union. However, Orbán could not prevent such a decision with a veto – a majority vote would suffice.

“The member states should not be fobbed off with lip service,” says FDP MEP Moritz Körner. It remains to be seen whether the reforms “actually prove themselves in practice”. It is important that “the money of European taxpayers no longer seeps away in the orbit of the Orbàn mafia.”