Hungary cannot even meet its own deadlines: EU funds at stake

Hungary failed to meet the deadline regarding the frozen EU funds. At the same time, the European Court of Justice’s decision could be precedential after a veto from the Hungarian government.

The Hungarian government must make satisfactory changes for the EU during its rule of law debate to receive the frozen funds totalling an eye-watering EUR 28 billion. But as Népszava reports, Hungary’s self-proposed deadline could not be met.

It was a well-known fact that the Hungarian government wanted to meet commitments to release EU funds frozen last year to Hungary by the end of March.

As we have previously reported, the EU required originally 17, later 27 amendments from Hungary, the vast majority of which include measures to strengthen the independence of the judiciary and anti-corruption measures.

According to Népszava’s sources, the negotiations are in the final stages but have not yet been concluded, so the end-March deadline will be passed. The European Commission is still analysing the Hungarian package of proposals and is awaiting precise information on the Hungarian government’s plans in some cases.

These include some of the bills to remove the conflict of interest in the governance of foundation universities, which the government is yet to present. For Hungarian universities, this is a crucial topic as currently, universities do not have access to their allocated Erasmus+ and Horizon Europe budgets.

Tibor Navracsics is due to visit Brussels again next week to discuss the matter with Budget Commissioner Johannes Hahn according to Népszava.

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EU picks up the gauntlet

Simultaneously, the European Court of Justice might overturn a decision made by then Minister of Technology László Palkovics in 2021, Portfolio reports, which could prove that the EU’s bodies won’t be afraid to put the Hungarian government in its place.

Palkovics vetoed a Hungarian mining firm’s acquisition by another Hungarian firm. One of the parties concerned, Xella Hungary, therefore challenged the minister’s veto in court, arguing that while the government had given itself the power to prevent acquisitions of Hungarian-based companies in the emergency declared because of the coronavirus outbreak, this could be contrary to the principle of EU law that the EU has the power to screen foreign investment.

Palkovics argued that it would be contrary to Hungarian national interest to allow an indirect third-country (Bermudian) owned enterprise to take control of such a “strategically important” company.

However, according to Tamara Ćapeta, Advocate General of the Court of Justice of the European Union, this transition was far from a “genuine and sufficiently serious threat to a fundamental interest of society”, and could have been a politically motivated measure restricting capital flow. Therefore, now the Hungarian government must prove that the acquisition of a gravel mine would be indeed a serious threat to the national interest.

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