EU gives Hungary a month to act before they suspend funds!

The European Commission has given the Hungarian government one month to deal with the rule of law problems. Otherwise, they will ask the EU governments to suspend the 2021-2027 funds.

At Wednesday’s EU Commissioners’ meeting, Budget Commissioner Johannes Hahn was authorized to send a letter to the Hungarian authorities with a one-month deadline to respond. In the letter, he outlines how Brussels evaluates the Hungarian government’s offers up to that point. In addition, it also contains what financial sanctions the EU willl propose if the Hungarian government does not adequately deal with the rule of law problems until then.

Rule of law problems

As euractiv.com writes, the new deadline is part of an EU process, called the “conditionality mechanism”. It is meant to protect the EU’s financial interests against breaches of rule of law by an EU government. However, this is different from other procedures EU has launched against Hungary over the rule of law. One of the main concerns is corruption. Although Hungary receives the funds for projects, the Commission worries that the money is not actually used for that purpose only. In addition, they worry about the independence of the judiciary, media and non-governmental organisations.

EU gives time until the middle of August

The Hungarian government should make written offers until the middle of August, reports Portfolio. If they do not do so, the discussion will move from the correspondence phase to sanctions. The Commission would present he problematic areas in the situation of the rule of law in Hungary that are sufficiently closely related to the distribution of EU funds. Moreover, they will formulate a proportional financial sanction proposal for the board, which will decide on it with a qualified majority. This means that at least 15 member states must support it representing at least 65% of the total EU population.

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Hungarian economy might be in trouble if the EU suspends funds

The suspension of the cohesion funds would be a major blow to the Hungarian economy. It is already suffering from a weakening currency, rising costs of borrowing. Moreover, a widening budget deficit and rampant inflation also cause difficulties. Not to mention that EUR 5.8 billion of recovery fund grants are still frozen. A senior EU official, who asked not to be named, said: “But it will be a serious proposal, not a symbolic one.”