Certain European Union countries’ attempt to link the approval of Hungary’s recovery fund to “completely unrelated” issues such as the global minimum corporate tax or a 18 billion euro loan taken out to aid Ukraine is “not fair” and “would create a dangerous precedent”, Finance Minister Mihály Varga said in Brussels on Tuesday.
Varga told a press conference after a meeting of EU finance and economy ministers (ECOFIN) that the European Commission’s recent positive assessment of Hungary’s recovery plan “after a year and a half” was a “significant step forward”. All member states support the plan’s content, and so it could be officially approved before the end of the year, he said.
At the same time, Varga regretted that the EC has maintained its proposal to suspend disbursement of funds for three operative programmes, despite the government’s fulfillment of 17 requirements until the November deadline.
Since this is the first time the rule of law conditionality is being used, several member states have said that the EC “should remain fair, objective and proportionate” and “base its standpoint on facts”, he said.
“Several member states have called for an objective evaluation, considering Hungary’s steps taken after November 19th; France and Germany, among others, think the Commission’s evaluation is somewhat disproportionate,”
Varga said. He expressed hope that the EC would conclude the procedure with a more “objective” assessment.
Regarding plans that EU member states would take out a joint loan of 18 billion euros to aid Ukraine, Varga said Hungary will not give its consent to that plan. “We have had bad experiences with joint loans – the one taken out during the coronavirus pandemic did not help Hungary to access the resources,” he said.
Hungary is ready to help Ukraine further but will only disburse its own resources on the basis of a bilateral agreement with concrete goals set in advance, he said, adding that Hungary already had the resources for that aid in its central budget at hand.
Meanwhile, Hungary has received over 1 million Ukrainian refugees and spent 31 billion forints (EUR 75.3m) on support for the country, he said.
Touching on the issue of the global minimum corporate tax, Varga noted that at 9 percent, Hungary’s tax rate was one of the lowest. The international attempt to introduce a global minimum tax would raise that to 15 percent, he said. Such a step would cost jobs and harm the country’s competitiveness, and so Hungary does not support it, he said.
Commenting on the issue, the finance minister of the Czech Republic, holder of the current EU presidency, said Hungary’s recovery plan would be “handled as part of a package also including the 18 billion euro aid to Ukraine and the global minimum corporate tax”. “If there is no agreement on one issue, then there is none on the other ones, either,” Zbynek Stanjura told reporters after the ECOFIN meeting.
Approving the package will also depend on what sort of measures Hungary would implement in the interest of protecting the EU budget, he said, adding that the Czech presidency had asked the European Commission to prepare a fresh report evaluating “the progress” the Hungarian government had made in legislation in connection with the rule of law situation addressed by the commission.
“The Czech presidency is fully committed to finding a compromise. Once that is achieved, it will be a mere technicality to reach an agreement on the entire package by the end of the year,”
European Commission Vice-President Valdis Dombrovskis said Ukraine is fighting serious financing shortages, and is counting on the first instalment of the aid in January already. While they couldn’t reach an agreement at the meeting, the work will continue in the coming days, he said.
“Ukraine is at war, we can’t allow one member state to derail or delay the aid,” he said.