EU Freezes €1 Billion in Funds to Hungary Due to Corruption Concerns
Background
Since his return to power in 2010, Hungarian Prime Minister Viktor Orban has strengthened his grip on power, allowing some of his allies to become spectacularly rich. [1]
EU Takes Action
In 2022, the European Union (EU) began "conditionality" proceedings against Hungary, seeking to block disbursements due to alleged infringements linked to public procurement and a lack of control and transparency. [2] While Budapest did undertake reforms, a total of €19 billion (US$20 billion) remain frozen. [3]
EU Funds Frozen
The first tranche of suspended commitments, amounting to €1.04 billion, expired at the end of 2024 without the suspension being lifted. This means that Hungary lost that funding. [4]
EU’s Concerns
The European Commission has concluded that Hungary does not meet EU democratic standards, specifically on corruption, political financing, conflicts of interest, and media independence. [5] Orban has promised to fight to protect money "that is ours." [6]
Orban’s Response
Orban has threatened to veto the EU’s budget to pressure it into relenting, stating, "They constantly try to take the money of Hungarians by a variety of means and a variety of methods." [7]
Economic Downturn and Political Tensions
With Orban under pressure amid an economic downturn, his new political rival, Peter Magyar, has called for early legislative elections, with several opinion polls showing his party in the lead. [8] Magyar has stated, "Time is running out. Let’s bring forward the election date so that the country does not unnecessarily lose another year. We will bring home the billions that the EU owes us." [9]
Article 7 Procedure
Hungary has also been targeted since September 2018 by an Article 7 procedure, which sanctions member states for "serious violations" of the rule of law and can, in theory, result in the suspension of a country’s voting rights in the EU Council. [10]
Conclusion
The EU’s decision to freeze €1 billion in funds to Hungary is a significant blow to the country’s economy, and the move is seen as a result of the EU’s concerns over corruption and lack of transparency in Hungary. The situation is likely to put further pressure on Orban, who is already facing an economic downturn and growing political tensions.
FAQs
- What is the EU’s conditionality regulation?
- The EU’s conditionality regulation allows it to block disbursements to member states that fail to meet certain democratic standards.
- What are the concerns over Hungary’s compliance with EU standards?
- The European Commission has expressed concerns over Hungary’s lack of transparency, corruption, and conflicts of interest.
- What is the current status of the EU’s Article 7 procedure against Hungary?
- Hungary has been targeted by the EU’s Article 7 procedure since September 2018, which can result in the suspension of a country’s voting rights in the EU Council.
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