The European Commission on Wednesday approved the release of 10 billion euros in cohesion funds to Hungary, almost a year after the money was frozen because the country failed to address ongoing concerns about the rule of law.
ADVERTISING
This means that the Hungarian government can submit reimbursement requests of up to 10.2 billion euros to finance development projects across the country.
“We have received sufficient guarantees to say that the independence of the judiciary in Hungary will be strengthened,” said Didier Reynders, EU Commissioner for Justice.
“However, today’s decision is not the end of the process. We will continue to monitor the situation closely and react early if any setbacks occur.”
The green light comes in an increasingly tense political environment as Prime Minister Viktor Orbán intensifies his opposition campaign to prevent the start of accession negotiations with Ukraine, Bloc a 50 billion euro special fund to maintain the war-torn country's budget and stop the provision of further military aid.
All three key issues will be discussed at a two-day summit of EU leaders later this week. To move it forward, unanimity is required.
The confluence of events – the release of the frozen cash and Orbán's looming veto – has fueled speculation that Brussels is horse-trading to appease Budapest, something the European Commission has strenuously denied.
The impression was reinforced on Tuesday when the prime minister's political director openly admitted in an interview that a quid pro quo was possible.
“Hungary’s EU funding and Ukraine’s funding are two separate issues,” the adviser said said Bloomberg. “But if the EU insists that funding for Ukraine should come from a revised EU budget, then the two problems will be linked.”
Asked about the comments, a Commission spokesman stressed that the decision was merely a procedural response to a judicial reform Hungary adopted in May to strengthen the independence of the judiciary and curb political interference in the courts.
“We have duties to provide relief. We are exonerating them in accordance with the rules that govern the budget,” said a Commission spokesman. “The statements made by people outside this institution do not bind us in any way and do not commit us to anything.”
The revision was specifically designed to meet the conditions or “super milestones” imposed by the executive branch to release the funds, including measures to strengthen the National Judicial Council, a self-governing supervisory board and reform the functioning of the Supreme Court.
According to a joint analysis According to Amnesty International and the Hungarian Helsinki Committee, the reform is unable to address the shortcomings highlighted by Brussels. “The adopted solutions, including their implementation method, are provisional and violate relevant laws and regulations as well as rule of law principles,” the analysis says.
In a joint letterThe European Parliament's four main political groups expressed similar skepticism and called on the Commission to wait at least until the conclusion of the National Judicial Council elections on January 10 before making a positive assessment.
“It is the duty of the Commission to continue to check that none of the reforms are subsequently reversed or weakened by a night decree or contradictory laws,” said the group leaders of the EPP, S&D, Renew Europe and Greens on Wednesday.
Frozen cash
In total, Hungary must meet 27 “super milestones” as well as four “horizontal requirements,” which in some cases overlap, to access more than 30 billion euros in cohesion and recovery funds that have been frozen since December 2022.
However, the judicial reform only serves to release up to 10.2 billion euros of the total amount.
The country will still be without a cohesion fund worth over 11.5 billion euros. This includes the €6.3 billion blocked under the so-called “conditionality mechanism” due to concerns over public procurement, conflicts of interest and corruption.
“Despite regular exchanges with Hungary, the Commission considers that Hungary has not addressed the violations of the principles of the rule of law” that led to the activation of the mechanism, the commission said.
ADVERTISING
The rest of the money goes to issues such as the right to academic freedom, the protection of the LGBTQ+ minority and the right to asylum.
In addition, Hungary will continue to have no access to its COVID-19 recovery and resilience plan, which includes €10.4 billion in grants and low-interest loans. Only 920 million euros were paid out in “pre-financing” to provide liquidity for energy projects.
“As the super milestones have not been fully met, no withdrawal request can be paid out for the time being,” the commission said said about the restructuring plan.
In his interview with Bloomberg, Orbán's political director said that the entire pot of money – over 30 billion euros, including the 10 billion euros canceled on Wednesday – should be handed over to the country.