An MEP of ruling Fidesz said on Tuesday that clear action was needed by Brussels against high energy prices and gas market speculation.
Fidesz MEPs call on EC for action against gas market speculation
András Gyürk said he had submitted written questions to the European Commission on behalf of the Fidesz group, adding that the EC had done nothing when gas transits through Ukraine were stopped at the beginning of the year.
He said that before starting its term, the EC led by Ursula von der Leyen had promised to reduce energy prices, yet in the past three months European gas prices have increased by around 20 percent. He added that despite the promises from Brussels, the market price of natural gas had increased by one-fifth since November.
“The bureaucrats watched idly as 15 billion cubic metres of natural gas was lost from the European market after the Ukraine gas transits stopped,” he said. “They also failed to act against the gas market speculation that resulted in increased prices when gas storage facilities were filled in the summer,” he added. “This is incomprehensible and it is the reason why we have turned to the European Commission with written questions,” he said.
“We expect concrete practical steps to be planned by the European Commission against speculation that makes summer gas acquisitions expensive,” he said. “Additionally, we expect information from Brussels concerning whether they plan to offer financial and technical support to East European countries affected negatively by the stoppage of Ukraine gas transits,” he added. Reducing energy prices is crucial to ensuring economic competitiveness and the welfare of citizens, Gyürk said.
Hungary’s ongoing struggle to secure EU funds has escalated even more. Over EUR 1 billion was permanently lost due to unresolved issues with rule-of-law compliance.
EUR 1 billion in EU funds lost
As Telex reports, Hungary is facing serious financial consequences as it permanently loses over EUR 1 billion in EU funds—the first time this has happened to a member state. The funds were frozen back in 2022 as part of an EU procedure aimed at protecting its budget from rule-of-law breaches. In that year, member states blocked EUR 6.3 billion, pointing to widespread issues with Hungary’s public procurement system, including corruption risks and lack of transparency.
Although Hungary has taken steps to address these concerns—such as setting up an Integrity Authority and reforming public tender processes—the European Commission recently ruled that the problems haven’t been fully resolved. As a result, vital funding for areas like energy efficiency and transport is now off the table. This loss could further strain Hungary’s budget, forcing the government to borrow more at a time when it’s already under pressure from an EU excessive deficit procedure.
Long-standing issues
Hungary had an additional year to avoid losing EU funds for three key programmes but failed to meet the conditions set by the European Commission. While the government claims the issue has shifted from technical and legal compliance to political negotiation, it made limited progress in addressing the EU’s concerns. Restrictions imposed in 2022 not only froze EUR 6.3 billion in funding but also blocked public interest trusts, including universities undergoing model changes, from accessing new EU tenders.
Despite being able to request a reassessment at any time, Hungary’s efforts have fallen short. The Commission cited unresolved issues, such as conflicts of interest in public interest trusts and a lack of transparency. Attempts to exempt certain entities from restrictions have only exacerbated tensions. As a result, the partial suspension of cohesion programme funding remains in place, further straining Hungary’s institutions
Hungarian students face challenges
Hungary’s struggle to secure EU funds has led to significant financial and institutional strain, with universities, research programmes, and students feeling the impact. A ban on public interest trusts has already cost millions in Horizon Europe collaborations and barred Hungarian students from Erasmus exchanges. The government introduced alternative programmes like HU-rizont and Pannonia, funded by taxpayers, but their budgets pale in comparison to the EU resources lost.
Hungarian politicians’ standpoint
Adding to the burden, Hungary faces daily penalties of EUR 1 million due to non-compliance with refugee rights rulings, amounting to EUR 400 million by late 2024. While Prime Minister Orbán insists that current EU funds will sustain the economy until 2026, the looming n+2 rule threatens further losses. Efforts to negotiate with the European Commission continue, but critics, including opposition leader Ferenc Gyurcsány, accuse Orbán’s government of recklessness, blaming its actions for Hungary’s financial setbacks. In addition, Péter Magyar, leader of the Tisza Party, often emphasises that his goal is to bring home EU funds. However, as political and financial pressures mount, securing EU funds remains a critical challenge for the Hungarian government.
Brussels started another infringement procedure against Hungary on 16 December due to inadequate civil aviation safety oversight. The European Commission called on Hungary to ensure adequate civil aviation safety oversight.
Civil aviation safety oversight problematic in Hungary
The European Commission decided to open an infringement procedure by sending a letter of formal notice to Hungary (INFR(2024)2239) for failing to comply with EU rules on civil aviation safety oversight. The Commission considers that Hungary is not in compliance with the requirements outlined in the Regulation on the technical requirements and administrative procedures for air operations (Regulation (EU) No 965/2012).
Hungary has failed to demonstrate that it has a sufficient number of qualified personnel to adequately oversee certified operators and verify their compliance. Furthermore, Hungary has not established a robust management system, which includes defined policies, procedures, and a clear organisational structure, to ensure compliance with the Regulation.
Formal notice sent by the European Commission
Additionally, Hungary has not ensured that certified organisations meet the necessary requirements before issuing certificates, approvals, or authorisations. It also lacks effective oversight programmes, including regular audits and inspections, to monitor the activities of certified organisations.
The Commission is therefore sending a letter of formal notice to Hungary, which now has two months to respond and address the shortcomings raised by the Commission. In the absence of a satisfactory response, the Commission may decide to issue a reasoned opinion.
Read also:
Budapest Airport back in Hungarian hands: HERE’s what’s next for Hungary’s main hub?
Budapest airport shuttle may be cheaper with new and longer routes, but buses may be more crowded in 2025 – read more HERE
The European Commission has set out its objections to Hungary’s regulation of public interest trusts in a detailed explanatory memorandum. The laws in question are crucial as they determine whether the model universities can access funds from the Erasmus+ and Horizon Europe programmes, which were previously blocked due to conflict of interest issues.
Entry into force and full application of the legislation
According to the European Commission, one of the fundamental problems is that the Hungarian legislation would only enter into force if Member States revoked their earlier decision, which is contrary to EU requirements. Such legislation should come into effect as soon as it is presented in order to address the substantive issues.
According to HVG, another serious concern is that the legislation does not apply to all the institutions involved, as not all the model-changing organisations are listed in the annex to the legislation. The EU believes the rules should encompass all relevant institutions and be enforced both prior to and during the application process for EU funding.
Weaknesses in the management of conflicts of interest
The European Commission identified significant shortcomings in how conflicts of interest are managed for members of the Board of Trustees and the Supervisory Board. While Hungarian legislation mentions the importance of integrity, it does not provide adequate safeguards to ensure effective oversight and enforcement.
The Commission expects all relevant individuals to submit declarations of conflicts of interest and assets prior to their appointment and periodically during their tenure. These declarations should be transparent and verifiable. Furthermore, this requirement extends to include relatives living in the same household to minimise the risk of potential abuse.
Lack of independence of the control system
The European Commission emphasised that assessments of conflict of interest and suitability should be conducted by an independent body empowered to make binding decisions. Such evaluations must occur before appointments are made, ensuring the suitability of individuals prior to their involvement in applying for EU funds.
The European Commission also highlighted the significant role of the Integrity Agency but condemned the current regulations for not granting it adequate access to all necessary databases and information. This lack of access impedes effective monitoring, transparency, and accountability.
Additionally, the EU criticised the absence of a specific methodology and procedure for addressing breaches of conflict of interest rules. There is a lack of proper investigative mechanisms and corrective measures, including disciplinary or criminal sanctions, to ensure adherence to the regulations. Consequently, the EU considers the effective management of declarations and conflict of interest situations to be insufficient.
Following the public disclosure of these criticisms, it has become evident that Hungarian regulations do not meet EU standards. As a result, the European Commission has chosen to maintain the prohibitive measures. However, the Hungarian government still has the opportunity to address the identified shortcomings and secure the unfreezing of blocked EU funds. Achieving this will require complete compliance with EU expectations.
Prime Minister Viktor Orbán said on Thursday that there was no consensus within the European Union regarding the war in Ukraine, so everything had to be done in connection with the war within the framework of bilateral diplomacy and not on behalf of the Hungarian EU presidency.
Ceasefire at Orthodox Christmas?
Orbántold a joint press conference with President of the European Council Antonio Costa and President of the European Commission Ursula von der Leyen after the EU summit in Brussels that the Ukraine war was the most important political issue but he had essentially no room for maneuvering on the matter because there was no consensus in the EU and it was therefore not possible to act on behalf of the European Council.
“So everything that could be done in the issue of the war had to be done independently from the presidency, not under the presidency’s framework. Actually under the arrangements of bilateral diplomacy,” Orbán said.
Orbán said much had been done, for instance a proposal for a Christmas ceasefire which had been presented outside the framework of the presidency.
In response to a question, he said he was aware that everyone wanted lasting peace and was thinking along the line of greater geopolitical context but Hungary had its own limits such as its size and its international influence corresponded to that.
He said he could see no obstacle to preventing the death of people in the frontline during the two or three days of Orthodox Christmas and to an agreement between the sides about the exchange of 700 prisoners from each side.
He added that this might be a small achievement compared to geopolitical goals, but if a few thousand fewer people die during Christmas, and if a few hundred or thousand fathers can return home to their families, it will be a European value.
We must take back leadership from the generals
Answering another question, Orbán said that he had seen in the past three years that there was no solution to the war on the battlefield. “I have seen some combative statements, military maneuvers, new weapons, hundreds of thousands dying, hundreds of thousands getting crippled, and who knows how many widows and orphans,” he added. Orbán said it was time for diplomacy to take back leadership from the generals, otherwise the war will not end within the foreseeable future.
In response to a question about how Donald Trump would end the Russia-Ukraine war as US president “in 24 hours”, Orbán said he had no authorisation to talk about the plans of other leaders. He said he had personally met Trump in the past two weeks, had a very long discussion with Russian President Vladimir Putin, and also met the president of Turkiye. He added that “even if everyone has something on their mind” he could only speak about his own plans.
Assessing the Hungarian presidency coming to an end on December 31, Orbán expressed thanks to von der Leyen and the EC for their excellent cooperation, and said that they had been able to put aside all political disputes in order to advance important matters. He also expressed thanks to Costa and his predecessor Charles Michel, saying that they had also done much in the interest of success.
Hungary’s political presidency
Orbán said there had been unprecedented security challenges in the past six months, with wars in Ukraine, in the Middle East and Africa, with a permanent danger of escalation. Illegal migration and its consequences threaten with the disintegration of the Schengen area, and economic indicators show that the EU is losing its global competitiveness, falling increasingly behind the main economic competitors.
In the meantime, the other global players have ambitious plans, with “some wanting to stay great and some wanting to become great”. As a result, Orbán said it had been decided that Hungary would operate a political presidency and not a bureaucratic one. He added that a great amount of work had been invested in the past six months, with the entire Hungarian state apparatus working to ensure that progress was being made.
In terms of competitiveness, Orbán said the Budapest declaration deserved historic attention considering that it calls for “a revolutionary streamlining”, affordable energy, supporting SMEs, and sets deadlines for the fulfillment of each task.
Orbán said another important point of the Hungarian presidency was that ministers responsible for demographic challenges met for the first time in the EU’s history to discuss the future of Europe’s demographics.
He also said that progress had been made in enlargement policy in the Western Balkans which had been blocked for a long time, talks could be started with Albania, three intergovernmental conferences were held and the organisation of an intergovernmental conference with Serbia is within reach.
The Hungarian prime minister noted that a decision about the full membership of Bulgaria and Romania in the EU’s Schengen zone had been made under the Hungarian presidency. The issue he said had been on the agenda for the past thirteen years and Hungary had held talks over six months with countries that had opposed the integration of the two countries. As a result, the full integration of the two countries will take effect on January 1, he said.
The current Hungarian presidency was the first occasion that 27 agriculture ministers managed to reach an agreement on the Common Agricultural Policy’s future, he said.
Orbán said that “we have also managed to adopt a declaration on fighting anti-Semitism and promoting Jewish life”. The declaration establishes that there is an alarmingly high-level of anti-Semitism in the EU and the community has a shared responsibility to make every possible effort towards reducing it, he said.
Orbán said that he became increasingly convinced over the past six months that the only possible way to the success, even the survival, of the European Union was if the EU makes itself more ambitious and undertakes “great things”.
“The Hungarian presidency’s slogan to make Europe great again was not a joke,” the prime minister said, adding that this was the only way for the EU to regain its competitiveness and to survive.
Asked about transatlantic cooperation, Orbán said there was full agreement at the summit that the future and security of Europe depended heavily on whether transatlantic cooperation could be maintained.
As regards the inauguration of the new US president on January 20, Orbán’s advice to the EU was to have “strategic patience and calm”, suggesting that “they should do nothing that would make future strategic cooperation within transatlantic relations more difficult”.
Six Hungarian universities on Wednesday expressed support for Hungary’s higher education model based on the opportunity given to universities to be run by foundations rather than directly by the state, saying that the European Commission had ignored powerful arguments made for the past two years that the changes had not at all compromised the autonomy of universities.
Referring to a recent European Commission decision to maintain the status quo locking students of Hungarian universities run by foundations from the Erasmus+ and Horizon programmes, the universities said in a statement that the commission was uninterested in pursuing dialogue.
The statement by Semmelweis, Óbudaand Veterinary Science universities of Budapest, and the universities of Debrecen, Miskolc, and Dunaújváros said the EC decision was “aimed at putting pressure on Hungary … involving students and researchers of 21 universities in a political conflict”.
The students and researchers “are suffering unjust discrimination”, the statement said, adding that the procedure breached the EU’s fundamental principles stipulating equal treatment and scientific freedoms.
“The EC’s problems with the Hungarian government … have nothing to do with Hungarian universities,” the statement said. “We are convinced that the European Commission and Council’s concerns against the government of Hungary in connection with the rule of law cannot be legitimately used as an excuse to interfere with the integrity of Hungarian universities and to grievously punish researchers and students,” it added.
The European Commission has called on Hungary to comply with EU rules on medically assisted reproduction by sending a reasoned opinion to the Hungarian government for allowing only state-owned or state-operated institutions to provide infertility treatment from June 2022. These restrictions put Hungary in breach of Article 49 of the Treaty on the Functioning of the European Union, which guarantees the freedom of establishment.
According to the European Commission, these provisions cannot be justified by public interest considerations, such as the need to protect public health or public order. The Commission said that the Hungarian authorities had failed to demonstrate that private providers had not previously provided safe and high-quality reproductive services. Moreover, the changes did not improve access to procedures, as the reduction in the number of providers had the opposite effect.
The European Commission also stated that Hungary’s restrictive legislation is not in line with EU values and principles. The Commission has given Hungary two months to respond and take the necessary measures. If the response is not satisfactory, the case could be referred to the EU Court of Justice.
Shortcomings in Hungarian aviation safety
The European Commission has sent another warning to Hungary, this time over civil aviation safety. According to the Commission, Hungary does not comply with the technical and administrative requirements of EU legislation on the operation of aircraft. The EU expressed concern that there are insufficient trained staff to properly supervise operators holding aviation licences.
According to the report, the Hungarian authorities have not put in place a sound management system to ensure adequate controls and audits. In addition, they do not always ensure compliance of the organisations concerned before issuing certificates, licences and approvals. These shortcomings may seriously jeopardise air safety.
The European Commission also considers that Hungary has failed to ensure that quality control systems meet EU standards. A letter of formal notice has been sent and the country has been given two months to respond and improve the situation. If the shortcomings are not remedied in time, the Commission may impose further sanctions.
European Union Laws and Hungary
Both cases illustrate the tensions between the European Union and Hungary in the area of legal harmonisation. The restrictions on medically assisted reproduction and the disregard for aviation safety requirements also show that the Hungarian government deviates from EU standards in a number of areas. The European Commission considers these measures to be not only illegal but also decisions that run counter to the interests of citizens.
The European Commission wants to ensure that EU citizens have free access to the services they need and that safety standards are respected. The coming months could be crucial for the Hungarian government, which could face serious legal consequences if the controversial rules are maintained. The European Commission could refer Hungary to the Court of Justice of the European Union, which could bring further international attention to Hungary.
European Commission has said Hungarian law changes aimed at addressing risks of conflicts of interest regarding “public interest trust” boards were insufficient to warrant the lifting of EU budget conditionality measures.The measures recommended by the commission “to protect the EU budget from breaches of the principles of the rule of law in Hungary” were adopted on December 15, 2022, by the European Council, the EC noted in a statement.”These breaches related to the areas of public procurement, prosecutorial action, conflict of interest, the fight against corruption and the public interest trusts,” the statement noted.”Hungary formally notified the commission about specific legislative amendments regarding public interest trusts and entities maintained by them” on Dec 2, and asked the commission to propose to the council that the measures be adapted or lifted.The commission said Hungary’s changes to the law did not “adequately address the outstanding concerns on conflicts of interests” regarding the boards, so the measures should remain in place. It added that “adaptations that would be needed to remedy the situation sufficiently” had been outlined to the government.
“Hungary can at any time adopt and notify new remedies to demonstrate to the Commission that the measures adopted by the Council should be adapted or lifted,” the statement said.
Artificial intelligence will usher in a new era in taxation, Finance Minister Mihály Varga said at the Tax Administration European Union Summit (TADEUS) in Budapest on Thursday.
AI opens new era in taxation
Varga told the heads of the tax administrations in the EU that the Hungarian government had established one of the most competitive tax systems in the world over the past decade. The National Tax and Customs Authority (NAV) is at the forefront in terms of digitalisation, he added, pointing to electronic systems for invoicing and monitoring flow of goods, and its preparation of several million tax returns each year.
Since 2010, government measures to crack down on tax evasion have reduced the VAT gap from 22pc close to 4pc, while the tax-to-GDP ratio has fallen from 40pc to 35pc, the third-biggest decline in the EU, Varga said.
He said Hungary was in 7th place in the latest annual ranking by the Tax Foundation of OECD countries’ tax competitiveness.
Varga said the meeting, held in the framework of Hungary’s six-month presidency of the Council of the EU, was a good occasion to summarise results and plans, and exchange information.
European Commissioner Wopke Hoekstra welcomed the participants in a video message.
Gerassimos Thomas, the director-general of the European Commission‘s DG for taxation and Customs Union, said the new EC was tasked with boosting the efficiency of taxation and fostering closer cooperation and more exchanges of information between tax authorities.
NAV president Ferenc Vagújhelyi said the two-day forum was an opportunity to share best practices.
Balázs Hankó, the minister for culture and innovation, has sent a letter to leaders of European parliamentary groups urging them to “take a stand” regarding the exclusion of Hungarian students from the EU’s Erasmus program.
“It’s time the European parliamentary groups took a stand” and ended the “discrimination” against Hungarian university students, Hankó told a press conference in Budapest on Monday.
Hankó noted that it it has been two years since “Brussels unlawfully excluded Hungarian students and Hungarian researchers” from the Erasmus and Horizon programmes. A year ago, the Hungarian government the European Commission its amendment proposals aimed at resolving the issue, and last month parliament passed a law that settles the conflicts of interest of university foundations’ board members, he added.
“We now have to take another step, and it’s time the European parliamentary groups took a stand,”
the minister said, adding that he sent letters to the group leaders.
He said the EP groups should clarify what they mean by non-discrimination “when they deny Hungarian students their entitlement” to participate in the Erasmus program.
He said Hungary also wanted to clarify the issue of autonomy, insisting that Brussels believed it meant removing university rectors and professors from foundation boards and allowing NGOs to select their replacements.
Hankó noted that in addition to the steps taken by the Hungarian government, six universities have filed a lawsuit against the EC over the matter.
Hungary’s fiscal strategy has drawn sharp criticism from the European Commission for lacking crucial details and relying on questionable data, as tensions grow between Budapest and Brussels over economic governance and compliance with EU rules.
Fiscal strategy under scrutiny
As Euronews reports, Hungary’s fiscal strategy has come under scrutiny for lacking crucial details and relying on questionable data, according to European Commissioner Valdis Dombrovskis’ letter sent to Finance Minister Mihály Varga. The letter, dated 5 December, highlights concerns over Hungary’s unrealistic economic forecasts submitted to Brussels, which are essential for evaluating its medium-term fiscal plans. Dombrovskis emphasised that key elements of the plan are either absent or require significant refinement, complicating the European Commission’s ability to complete its assessment.
Critique on Hungarian economic growth
The Commission also criticised discrepancies in Hungary’s data on economic growth, inflation, and interest expenditure, urging better alignment with EU methodologies. The analysis aims to detail how Prime Minister Viktor Orbán’s government intends to achieve fiscal balance after pandemic-induced spending relaxations. However, the EU’s evaluation may be delayed beyond the current 12 December deadline, potentially extending into January, due to the extensive gaps in the submitted information.
Strict debt and deficit limits
The EU imposes strict debt and deficit limits on member states under its Stability and Growth Pact, though enforcement has historically been lenient. These rules, aimed at preventing economic crises like Greece’s in 2007-8, were suspended during the pandemic and energy crisis but have been reinstated this year. Hungary’s delayed fiscal plan submission meant it missed November’s assessments, unlike most other member states. Exceptions were made for five nations, including Germany and Belgium, facing political disruptions. Of 21 assessed plans, only the Netherlands failed, criticised for its projected deficit increase driven by tax cuts and higher public investment.
Meeting Brussels’ fiscal demands often stirs domestic political tensions, as seen in France where Prime Minister Michel Barnier’s government collapsed over resistance to his deficit-reduction plan. Meanwhile, Hungary faces its own challenges after six contentious months chairing the EU Council. Budapest has blocked sanctions against Russia, defied EU court rulings on asylum rights, and faced suspended EU funds as a result of its actions.
EU cybersecurity agency ENISA must help to strengthen EU institutions and member states, especially given current cybersecurity challenges, Zoltán Kovács, the state secretary for international relations and communications, said before a transport, telecommunications and energy council meeting in Brussels on Friday.
Kovácsnoted that ministers are assessing ENISA’s role in “the dramatically changing European cybersecurity ecosystem” in light of fresh legislative developments, adding that a new leglislative framework for ENISAwould help to address numerous challenges.
Member states will relate their experiences and expectations to the European Commission during the meeting, he said.
Also, the conclusions on the European Commission’s White Paper on the development of the European digital infrastructure aiming to improve the bloc’s logistics, infrastructure and security will be presented at the meeting.
He said the European Commissionshould take seriously the experiences and practices of EU member states rather than proposing ideas that are hard to implement.
Kovács said that whereas digital infrastructure was a security consideration as important as the cybersecurity agency itself, it was also a key component of competitiveness, a Hungarian EU presidency priority, as “all such infrastructure ensures that industries and institutions can enhance their competitiveness”.
Regarding the Digital Decade 2030 policy programme, Kovács said that ministers were scheduled today to hold a “substantive political debate”, and ideas on boosting competitiveness, efficiency and the challenges set out in the Budapest Declaration would be important aspects of the discussions.
Ministers will have an informal lunch with the deputy secretary-general of UN agency International Telecommunication Union to discuss future cooperation and how to strengthen Europe’s place in international telecommunications developments, “an area where clearly Europe must move forward in terms of competitiveness.”
Read also:
PM Orbán awards ‘Mr Russia’, Hungary interested in Russia’s new security system – read more HERE
Major security risk: Hungary’s defence system compromisedin USD 5 million cyberattack
Developments over the last few weeks have shown that the “European Union elite” is doubling down on defying the will of the voters, an MEP of Hungary’s ruling Fidesz said on Sunday, warning that this could have “tragic consequences” when it comes to the bloc’s policy on the war in Ukraine.
Csaba Dömötör told public radio that the coalition agreement signed by the European People’s Party, the Socialist and Liberal EP groups this week and adopted on Thursday, reinforcing their support for Ukraine, also contained “the most aggressive EP resolution yet”.
He said the resolution calls for member states to commit 0.25 percent of their annual GDP to providing military support to Ukraine, noting that in Hungary’s case this would amount to 200 billion forints (EUR 483.8m). The resolution also lists the types of weapons member states are expected to send and proposes expanding sanctions on Russia to cover natural gas and uranium, he added.
This, he said, would render Hungary’s Paks nuclear power plant inoperable and gas would become far more expensive.
Dömötör said the resolution also calls on member states to “actively put pressure on Hungary to give in” on matters related to the war.
He said the EP wanted to continue the US Democratic administration’s policy, “even though it was defeated a few weeks ago”.
The MEP said that “although there are now slightly more references being made to peace and peace talks”, the call for peace was absent from the resolution, “and the slogan remains that Ukraine should be supported for as long as necessary”.
Meanwhile, Dömötörsaid the resolution also called for supporting the Russian opposition, adding he believed that the bloc should instead be focused on fixing its economy and ensuring peace.
He said the resolution’s call for cooperation with South Korea was a reaction to reports of North Korean troops being deployed in Ukraine, calling it “grossly irresponsible” for the EP to call for “further escalatory steps” in the current situation.
Noting that the resolution was not legally binding, he said history showed that binding decisions in the bloc tended to be preceded by these kinds of resolutions.
The “Fidesz-DK grand coalition” has been officially formed in the European Parliament with the two Hungarian parties voting together against the new European Commission which received decisive support despite “Orbán and Gyurcsány joining forces”, the leader of the Tisza Party said on Wednesday.
Péter Magyar said in a statement that “it is especially funny that Orbán and his people did not support even their own candidate, Olivér Várhelyi”. Magyar added that the latest poll results had demonstrated that “a smear campaign using manipulated recordings” against him did not work but “had the contrary effect”. He said the Tisza Party would continue to focus on healthcare, education, child protection, rescuing the Hungarian countryside, setting the Hungarian economy on a growth path and managing the cost-of-living crisis, issues that impact the daily life of Hungarians.
The Patriots for Europe group will not vote for Ursula von der Leyen’s new European Commission in light of its “backroom deals and poor decisions” that “set Europe on the path of crisis in the past five years”, Fidesz MEP Kinga Gál said in Strasbourg on Wednesday.
“The Patriots’ and Fidesz delegation’s stance is clear: we and the European majority who voted for us in the European parliamentary elections want European politics to change,” Gálsaid before a plenary debate on the commissioners and the commission’s programme.
She insisted that Europe was on the path towards “bankruptcy” on issues such as illegal migration, the centralisation of the Brussels administration, “anti-farmer greenwashing”, and its “pro-war position”.
She added that the new commission, backed by the European People’s Party and left-liberals, was incapable of answering to voters who desired change in the way the bloc was run and the policies it pursued.
Gál said the “unacceptable pact” determining the next five years would lead to “further illegal migration, war-mongering, ideologically driven politics, and the blackmailing of member states” by withholding EU funds.
Commenting on commissioner hearings in the EP, she said the outcomes had been decided in advance, regardless of the commissioner-designate’s professional preparedness, and she insisted that Hungary’s Olivér Várhelyi had amply demonstrated his competence.
The Patriots group and Fidesz “represent change in the EU”, she said. “It’s clear that our voters everywhere want a voice for change,” she said, adding that “peace, an end to illegal migration, border protection, freedom from ideology and sovereignty” were their top priorities.
Hungary faces a substantial loss of EU funding this year, intensifying budgetary pressures. Additionally, the government’s economic targets are under threat due to slowing export markets, declining domestic consumption, and a weakening forint.
Major losses in EU funding
As Portfoliowrites, Hungary faces substantial losses in EU funding this year, with estimates suggesting over EUR 1.1 billion could be forfeited due to unresolved rule of law disputes and delays in the conditionality procedure. Additionally, EUR 300 million in fines are set to be deducted by the European Commission. Under the n+2 rule, any suspended funds not addressed within two years will be permanently lost, posing a critical deadline for Hungary to lift the freeze by year-end. The frozen funds impact key allocations, including HUF 430-450 billion (approximately EUR 1-1.1 billion) from the 2022 budget, targeting vital programmes.
Concerns about transparency
Hungary’s budget faces mounting pressure due to fines from the European Court of Justice, including a daily EUR 1 million penalty and a one-off EUR 200 million for failing to implement asylum reforms. The European Commission has already deducted EUR 300 million from cohesion and agricultural EU funding, delaying development projects and complicating efforts to meet the 2024 budget deficit target. Approximately HUF 125 billion (EUR 304 million) must now be sourced domestically to replace these funds.
Despite reforms claimed by the government in autumn 2023, the European Commission continues to express concerns about transparency and anti-corruption measures. Key unresolved issues include strengthening the Integrity Authority, improving asset declarations, ensuring judicial oversight of corruption cases, and addressing conflicts of interest in public institutions. Budget Commissioner Johannes Hahn highlighted the slim chances of resolving these disputes before year-end, with inevitable resource losses under the n+2 rule looming in 2024.
Still optimistic?
Hungary’s medium-term economic plans, released in November, aim to address the European Commission’s excessive deficit procedure and the ongoing challenges of securing EU funding. GDP growth is forecast at a modest 0.8% for 2024, down from earlier projections of 1.5%, with hopes for recovery to 3.4% by 2025. However, external risks, including potential trade conflicts involving the US, EU, and China, threaten these targets, potentially reducing domestic GDP growth by 1-1.5%.
The government is committed to reducing the structural deficit to 2.7% of GDP by 2025 and public debt annually to meet EU requirements, yet this year’s budget deficit is expected to reach 4.5%. Achieving these fiscal goals is complicated by limited EU funding access, daily fines tied to migration policy, and the potential loss of frozen cohesion funds. Rising costs for pensions, public sector wages, and essential services, alongside weak export markets and cautious consumer spending, further challenge recovery. Plans to boost investment and energy efficiency depend on fiscal discipline, posing a significant test for the government’s strategy.
MOL faces a pivotal crossroads as Hungary’s oil company navigates EU sanctions, costly refinery upgrades, and a race against time to end reliance on Russian crude—if Brussels agrees to help foot the bill.
Is MOL ready to give up on Russian oil?
As Politico writes, Hungary is willing to end its reliance on Russian oil by late 2026, provided the European Union contributes financial support, according to MOL Group, the country’s leading oil and gas company. György Bacsa, MOL‘s executive vice president for strategic operations, highlighted the USD 500 million (EUR 474 million) cost of adapting its refineries, including Hungary’s sole facility processing Russian crude, to handle alternative supplies.
While the EU has set an informal 2027 deadline for phasing out Russian oil, the Hungarian oil company is seeking “a couple of hundred million” in EU funding to accelerate the transition. The Hungarian oil company also operates refineries in Slovakia that process Russian crude, underscoring the broader regional impact of diversification efforts.
Lack of EU financial support
Hungary’s reliance on Russian oil persists, with MOL continuing imports under a long-term contract with Russia’s Lukoil, set to expire in mid-2024. György Bacsa, the company’s executive vice president, emphasised that Hungary’s refining sector currently receives no EU financial support for transitioning away from Russian crude, despite the EU’s focus on energy security. While Hungary remains one of the few EU countries exempt from the 2022 ban on seaborne Russian oil imports, its dependence has increased, even as other Central European nations reduce theirs.
Bacsa expressed concern over potential EU sanctions tightening without accounting for Hungary and Slovakia’s reliance on Russian oil. He warned that new policies, like the roadmap of incoming EU energy chief Dan Jørgensen, must address regional disparities, as Western Europe’s energy transition pace does not reflect Hungary’s challenges. Meanwhile, the Hungarian oil company continues sourcing discounted Russian crude and negotiating future supply deals if legally permissible.
Trouble with navigating sanctions
The Hungarian oil giant, partially owned by the government, has faced challenges navigating EU sanctions and geopolitical tensions. While windfall taxes imposed by Budapest on MOL generate significant revenue for the state, the firm’s reliance on Russian oil remains under scrutiny. In July, the Hungarian oil company resolved a crisis when Ukraine sanctioned Lukoil by agreeing to reclassify Russian oil as Hungarian once it crossed into Ukraine, securing supply continuity. However, this workaround may face opposition from the EU, as briefing documents for incoming energy commissioner Dan Jørgensen suggest MOL’s imports through Ukraine could still be classified as Russian oil, potentially complicating Hungary’s energy strategy.
Budapest is hosting the European SME Assembly, a high-level political and professional forum for discussing current challenges and trends, and one of the tools for implementing the European Union’s SME Strategy, in the framework of Hungary’s presidency of the Council of the EU.
SME Assembly in Budapest
Addressing the assembly on Tuesday, National Economy Minister Márton Nagy pointed to the need to temporarily ease the EU’s fiscal regulations and channel more resources to the digital and green transitions. He pointed to the Budapest Declaration on the New European Competitiveness Deal adopted at an EU summit in Budapest earlier in November, and said that the Draghi and Letta reports had warned the EU would fall behind China and the US in the global competition if fiscal rules weren’t loosened and more money wasn’t ploughed into the digital and green transitions.
Nagy said the current Maastricht criteria “significantly restricted” member states’ room for fiscal manoeuvre. He added that fiscal deficits relative to GDP had averaged 9pc in the US and 7.6pc in China in recent years, while the gap was 4.5pc in the EU.
He blamed the EU’s “prudent” fiscal policy for the widening innovation gap between the EU and the US and China.
Nagy said the EU’s competitiveness problems were also evident on the electric vehicle market, with the share of EV sales among new vehicle registrations reaching 15pc in Germany and 20pc in France, well under the 30pc rate in China.
He added that Hungary’s government was tapping significant resources to support the green transition.
Hubert Gambs, the European Commission‘s deputy head for the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs, said proposals made at the meeting in Budapest could contribute to the drafting of the EC’s new single market strategy set to be unveiled in the summer of 2025.
At a press conference at the event, state secretary for SMEs Richard Szabados said nine companies, earlier winners of funding, had been showcased at the assembly, while the activities of local business development agencies were presented.
He added that sustainable operation of SMEs, developing the defence industry, boosting management skills, digital coalitions, business development clusters, and artificial intelligence in R+D+I were topics discussed at the assembly.
Szabados said the 500-600 participants got a chance to see local examples of businesses run by women and fintech companies on Monday.
He highlighted the need for economic policy to encourage corporate investments and for SMEs to have access to financing.