HUNGARY: The European Union’s executive on Sunday recommended suspending around 7.5 billion euros in funding to Hungary over corruption, the first such case in the 27-nation bloc, as part of a new sanction designed to better protect the rule of law.
The EU imposed the new financial sanction two years ago precisely in response to what it says amounts to undermining democracy in Poland and Hungary, where Prime Minister Viktor Orbán has silenced the courts, media, NGOs and academia and curtailed migrants’ rights. , gays and women during more than a decade in power.
“This is a breach of the rule of law that threatens the use and management of EU funds,” said EU Budget Commissioner Johannes Hahn. “We cannot conclude that the EU budget is sufficiently protected.”
He highlighted systemic irregularities in Hungary’s public procurement laws, insufficient safeguards against conflicts of interest, deficiencies in effective prosecutions and deficiencies in other anti-graft measures.
Hahn said the Commission is recommending the suspension of around a third of the cohesion funds planned for Hungary from the bloc’s shared budget for 2021-27, totalling 1.1 trillion euros.
The €7.5 billion mentioned represents 5% of the country’s estimated GDP for 2022. EU countries now have three months to decide on the proposal.
Hahn said Hungary’s latest pledge to deal with EU criticism was a significant step in the right direction, but it still needed to be translated into new laws and practical measures before the bloc could be reassured.
Development Minister Tibor Navracsics, responsible for negotiations with the EU, said Hungary would meet all 17 of its commitments to the European Commission to avoid losing any EU funding.
“Hungary has not committed itself to confuse the Commission,” Navracsics told a news conference. “We have made commitments that we know can be delivered, therefore we will not face a loss of funding.”
Orbán’s government has proposed the creation of a new anti-graft agency in recent weeks as Budapest comes under pressure to secure money for the ailing economy and the forint, the worst-performing currency in the EU’s east.
Orbán, who calls himself a “freedom fighter” against the worldview of the liberal West, denies that Hungary, a former communist country of around 10 million people is more corrupt than others in the EU.
Navracsics said Orban’s government will submit legislation to parliament on Friday to set up a new independent anti-bribery office to monitor public procurement for EU funds, with the body expected to be up and running by the second half of November.
Hungary has also pledged to introduce several other anti-corruption measures, including stricter conflict-of-interest rules, expanding the scope of financial reporting and expanding the powers of judges to prosecute suspected corruption.
Navracsics expressed hope that the Commission would be reassured by the implementation of reforms and withdraw its proposed sanctions against Hungary by November 19.
The Commission is already blocking around €6 billion in funding planned for Hungary under a separate COVID economic recovery stimulus over the same corruption concerns.
In 2018, Reuters documented how Orban was funnelling EU development funds to his friends and family, a practice that rights groups say vastly enriched his inner circle and allowed the 59-year-old to consolidate power.
Hungary had irregularities in almost 4% of spending from EU funds between 2015 and 2019, according to the bloc’s anti-fraud office OLAF, by far the worst result among the 27 EU countries.
Orbán has also rubbed many in the bloc the wrong way by cultivating continued close ties with President Vladimir Putin and threatening to undermine the EU unity needed to impose and maintain sanctions on Russia for waging war against Ukraine.