Hungary Faces Continued Struggles in Unlocking EU Funds
Hungary has not made any significant progress in addressing the concerns raised by the European Commission regarding its democratic backsliding, which has led to the freezing of €18 billion in cohesion and recovery funds. This information comes from the latest edition of the Rule of Law Report, published by the European Commission on Tuesday.
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The report highlights that Hungary has failed to make progress on seven out of eight recommendations issued last year. These include reforms related to lobbying regulations, combating high-level corruption, and ensuring the editorial independence of public media. The lack of advancement is a major obstacle for the release of the funds, which are crucial for Hungary’s economic development and recovery efforts.
Michael McGrath, the European Commissioner for Justice, expressed his disappointment during the presentation of the report. He emphasized the importance of compliance with the rule of law as a prerequisite for accessing these funds. “It is deeply disappointing we’re not in a position to report further progress on the recommendations that were made last year,” McGrath stated. He also reiterated the Commission’s readiness to engage in dialogue but warned that if progress is not made, all available tools would be used.
McGrath pointed out the deteriorating environment for civil society organizations in Hungary, citing two recent controversial developments. One was the ban on the Pride parade, which organizers managed to bypass. Another was a draft law on transparency for foreign-funded NGOs, which was delayed following backlash.
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The frozen funds consist of approximately €8.4 billion in cohesion funds and €9.5 billion in COVID-19 recovery funds. Disbursement of these funds depends on meeting certain legislative conditions, some of which overlap with the recommendations outlined in the annual report.
Previously, Hungary had unblocked €10.2 billion after implementing a reform aimed at strengthening judicial independence and reducing political interference in the courts. However, the decision to release this amount before a critical summit sparked controversy and led to a lawsuit from the European Parliament.
The remaining €18 billion remains frozen, with no indication of a resolution in sight. This financial dispute has intensified the long-standing conflict between Brussels and Budapest. Hungarian Prime Minister Viktor Orbán has accused the Commission of engaging in “financial blackmail” and interfering in internal affairs.
Orbán has also refused to pay a fine imposed by the European Court of Justice over Hungary’s “unprecedented” breach of migration law. The fine includes a lump sum of €200 million and an additional €1 million for each day the violation continues. This daily fine is periodically deducted from Hungary’s share of the EU budget.
McGrath stressed the importance of complying with European Court of Justice judgments, stating that it is a binding obligation for EU member states. “Compliance with ECJ judgements is not optional or discretionary. It is a binding obligation of EU member states. It is a core treaty obligation,” he said. He also emphasized that the primacy of EU law must be respected at all times.
As the debate over the next multiannual budget (2028-2034) approaches, fundamental rights and democracy will be central themes. President Ursula von der Leyen is expected to present her proposal before the summer break, with a commitment to establish a stronger link between the disbursement of EU funds and compliance with the Rule of Law Report. This move aims to ensure that EU financial support is tied to adherence to democratic principles and the rule of law.
