With the European Commission proposing to withhold 65 per cent of Hungary’s badly needed €7 billion recovery funds over rule-of-law concerns, Budapest is desperately engaged in damage-limitation. Some €4.64 billion of the funds have been frozen for more than a year, and this week it will unveil a series of anti-corruption measures, including a Bill on state procurement transparency and an anti-corruption agency, in a bid to placate fellow member states and put off the union’s sanctions.
Hungary is due to receive about €22 billion of cohesion funding under the current 2021-27 EU budget, which the commission is also seeking to claw back under the union’s as-yet-untested so-called rule of law conditionality mechanism, designed to protect the union’s finances from mismanagement. A recent internal commission paper suggests there is a “very significant” risk over Hungary’s management of EU funds, citing breaches in public interest rules and an unusually high number of contracts awarded to a single bidder. The commission move, confirmed yesterday, comes after MEPs backed a report last week which concluded that Hungary is no longer a full democracy and has become an “electoral autocracy”. Eighty per cent of parliament supported the report, which points to “the risks of clientelism, favouritism and nepotism in high-level public administration”. Its passage will be largely symbolic, but it adds political weight to the commission’s initiative.
In 2018, MEPs triggered the EU’s Article 7 procedure against Hungary, a cumbersome process used when a member state is considered at risk of breaching the union’s core values. That process, which can be held up by a single ally of the alleged offender, has since stalled in the European Council. In July, the Commission took Hungary to the Court of Justice of the EU for allegedly violating laws on media freedom and LGBTQ+ rights, and last week proposed a media freedom Bill to protect journalism from state influence and snooping. Hungary and Poland are clearly in its sights.