Brussels calls for freezing 7.5 billion in aid to Hungary for jeopardizing the rule of law

It will be up to the 27, who have up to three months to decide

The European Commission has proposed Sunday to freeze up to 7.5 billion euros of European cohesion funds planned for Hungary in the period 2021-2027 in the face of the anti-democratic drift of Viktor Orbán’s government and the fear that the management of these community resources will be affected by the threat to the rule of law in this country.

At a press conference in Brussels, Budget Commissioner Johannes Hahn explained that the College of Commissioners has “unanimously” endorsed the proposal to suspend “65 percent” of the money committed to three Hungarian Cohesion policy programs and the ban on concluding public interest tenders with direct or indirect management of European programs.

It is an “appropriate and proportionate” measure, Hahan has defended, of a suspension that will affect the Hungarian operational programs of environment and energy efficiency, integrated transport and territorial development.

The Hungarian response has been in the words of the minister without portfolio in charge of Regional Development and use of EU funds, Tibor Navracsics, who has assured that this freeze might not be 99 percent effective, so the request is “irrelevant”.

“The government has no intention of failing to fulfill its commitments, so the suspension of the 3 billion (Hungarian forints) is irrelevant because it could be discounted up to 99 percent,” Navracsics explained at a press conference reported by the Hungarian press.

In fact, Navracsics stressed that the European Commission’s decision is important because it opens the compliance phase and so by November 19 it will be able to decide for itself whether Hungary has fulfilled its commitments. If so, he stressed, all cross-compliance procedures would be withdrawn. “We are moving in the right direction,” he reiterated.

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Navracsics has recalled that 17 commitments have been reached with the EU and that this very Sunday the first legal amendments to comply with them will be presented. A second package is scheduled to be presented on Friday.

The final decision remains in the hands of what the EU-27 will decide within a maximum period of three months, during which they will have to assess whether the measures Budapest has promised to implement between now and November are sufficient to correct the systemic irregularities identified, with far-reaching reforms to strengthen the fight against corruption and fraud.

The suspension of European aid in case of serious threats to the rule of law in EU countries is a measure provided for since last January in the conditionality mechanism included in the new rules for the management of the EU Budget.

Once Brussels officially presents the proposal to the Council, at the latest on September 22, said Hahn, the Twenty-seven have one month to take a decision, extendable for two more months. The commissioner has already advanced that he is confident that the Council will make use of the maximum period in its evaluation because the reforms promised by Orbán need time for their legal processing and implementation.

The case dates back to last April, when Brussels initiated the conditionality procedure to freeze funds earmarked for Hungary to prevent their opaque use. Then Budapest refused to cooperate to amend the situation and it was not until this summer, when the Commission put a figure on the funds at risk of suspension, that the Hungarian authorities initiated dialogue with the Community services to seek an agreement.

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Hahn has assured in his appearance this Sunday that Budapest has proposed “17 very concrete measures” that in his opinion are “on the right track” but that for the moment they are only promises, which for the moment “are nothing”, so the Council will have to monitor whether they are carried out before taking a decision.

In his first draft, Hahn proposed last July to freeze up to 70% of the aid in question, but has finally lowered the scope of the punishment to 65% in view of the “seriousness” of the measures proposed by Budapest.

“The point is that we are still on promises, announcements, they are serious but they are nothing more, that’s why we have decided to leave the percentage high until the measures are fulfilled and implemented as expected,” Hahn reasoned to the press.

In the range of reforms that the EU expects to protect common funds from influence peddling, corruption and other frauds in Hungary, the creation of an Integrity Authority with expanded powers and an Anti-Corruption task force with safeguards to ensure the participation of the entire civil society stand out.

The Hungarian authorities should also strengthen the legal framework against corruption, ensure transparency in access to public and European funds by foundations, strengthen audit and control mechanisms and reforms in the judicial system so that the decisions of the Prosecutor’s Office can be appealed.

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