The European Commission wants to freeze more than €13bn (£11bn) of EU funds for Hungary over concerns about democratic weaknesses and failures to tackle corruption.
The proposals, which still have to be approved by EU member states, mark a decisive moment in the commission’s battle with the Hungarian prime minister, Viktor Orbán, over the rule of law.
The EU executive proposed in September suspending €7.5bn in economic development funds for Hungary, as it feared Orbán’s government could not guarantee proper use and oversight of the money. Budapest had until 19 November to implement 17 remedial measures, including setting up an anti-corruption taskforce and tightening rules against conflicts of interest in the award of public funds.
The European commissioner in charge of the EU budget, Johannes Hahn, told reporters on Wednesday that Budapest had “unfortunately not implemented the remedial measures, so we could not say that the risks have gone away”, although he added that Hungary was “moving in the right direction”.
Separately, while the commission approved Hungary’s long-delayed €5.8bn Covid recovery plan on Wednesday, it said no money should be released until Budapest hit 27 “super milestones” that include securing the independence of the supreme court (Kúria) and increasing the powers of the National Judicial Council, a self-governing body whose members were recently attacked by pro-government media. The 27 “super milestones” include the 17 remedial measures against corruption.
If the recovery plan has not been endorsed by the end of the year, Hungary stands to lose billons.
EU officials think they have a unique moment to push Orbán for reform, as the Hungarian economy falters, increasing the country’s need for funds.
But officials are also wary, noting that Orbán, who has been in power since 2010, has previously promised changes while continuing to increase government control over the judiciary, restrict independent media and loosen checks on cronyism and corruption.
Hungary has been one of the biggest beneficiaries of EU money, with more than 80% of public investment coming from “cohesion funds” that are intended to help Europe’s poorer countries and regions catch up with the wealthiest.
Petri Sarvamaa, a Finnish centre-right MEP, said the decision was a “historic moment for the protection of the rule of law in Europe” and called on the EU’s 27 member states to confirm the decision. “If EU citizens’ money cannot be protected against irregularities, then it cannot be disbursed.”
The €7.5bn funds can only be withheld if two-thirds of the 27 member states representing 65% of the EU’s population vote for the plan, an outcome that is not certain.
Hungary’s government has angered neighbours and alienated allies over its sharp criticism of EU sanctions against Russia and threats to veto €18bn in funds for Ukraine. EU finance ministers are expected to push for Hungary’s approval of the €18bn aid for Ukraine before they take a decision on whether to release Budapest’s EU funds.
EU diplomats have accused Hungary of taking hostage other issues, such as blocking an international agreement on minimum corporate tax rates.
Hungary’s government has yet to comment on the latest announcements, but has previously denied wielding vetoes to secure the release of EU funds.
In an interview with the Hungarian Nation newspaper published on Monday, Orbán’s chief spokesperson, Zoltán Kovács, said “the left” had taken the EU institutions hostage and were “using their monopoly to exert political pressure, to blackmail, to continually apply double standards, and to make relentless attempts to slaughter governments and political forces which don’t think in the way that Brussels tells them to think”.