EU’s ultimatum to PM Orbán: no political deal behind closed doors

Recent speculations in Hungarian media suggest that PM Orbán may attempt to leverage his position to potentially blackmail the European Union by threatening to veto the modification of the EU budget, a crucial step to provide additional financial aid to Ukraine that requires unanimous support. In exchange for Orbán’s approval, the Hungarian government aims to access billions of frozen EU funds, which have become imperative due to the Hungarian economy’s downturn.

In a previous report HERE, we highlighted the current economic challenges Hungary is facing. Recently, the International Monetary Fund has revised down its GDP forecast for Hungary, which understandably has a negative impact on the general public sentiment. It is no wonder that, according to a recent statistics, Hungarians rank the most pessimistic in Europe regarding economic prospects. Moreover, Hungary has not received a single cent from the EU’s Recovery and Resilience Fund (RRF) or development funds due to concerns about the rule of law.

Brussels has stipulated specific changes in Hungary’s legal system as prerequisites to release the funds, while the Hungarian government claims to have fulfilled these “milestones.” Even independent journalists believe that the European Commission‘s actions concerning Hungary lack coherence, and they may always find legal grounds to keep the funds frozen if they wish.

Orbán’s grand strategy in jeopardy?

This is why Orbán’s great master plan carries significant weight. Since the European Union must adjust its budget due to excessive spending caused by COVID and the Ukraine conflict, they currently require Orbán‘s support. However, there are plans to alter the current unanimity requirement for such matters. Hence, Hungarian journalists speculate that Orbán may attempt to “blackmail” Brussels for a green light on a substantial sum of EU funds. The Financial Times also reported on this possibility last week, suggesting that Brussels might unlock EUR 10.7 billion from the cohesion fund if Orbán supports the budget modifications. This would mark one of the Hungarian prime minister’s most significant political achievements. Orbán openly discussed these plans in a speech in Tusványos earlier this summer. You can find our summary HERE.

Nonetheless, Věra Jourová, the European Commission’s Vice-President for Values and Transparency, has categorically ruled out such a deal. According to Szabad Európa, she stated that the financial taps will remain closed until the Hungarian government fulfills all of the EC’s prerequisites. She emphasised that Hungary must enact reforms in its judicial and prosecution systems, aimed at combating fraud and corruption. Additionally, Hungary must demonstrate to the European Commission its commitment to protecting human rights.

Jourová asserted that this process is purely based on legal requirements without any underlying ideology. She noted that decisions regarding the acceptance or rejection of the government’s reforms will be made in the coming weeks. According to information from Szabad Európa, the Hungarian government submitted its responses to the European Commission’s questions regarding the judicial reform package on 13 October.

If you want to learn more about the fate of EU funds in Hungary, you can find additional information HERE.