EU wants to cut Hungary money: what the dispute is about

Viktor Orbán has been Prime Minister of Hungary for 12 years. Image: / imago images


Joana Rettig

Between the European Union and its member state Hungary it boils again. Now the EU wants to cut funds for the country, which is led by the right-wing conservative party Fidesz.

But why actually? Where is the problem? An overview:

What is the problem?

The EU Commission wants to withdraw a total of 7.5 billion euros from Hungary. This is not about fines, but about the withholding of fundsthat the EU would pay to the member state. The reason for this is that Hungary has been violating the principles of the rule of law for years, as the EU Commission announced.

However, nothing has been decided yet. So far it’s just a threat. A majority of the EU states would first have to agree to this project.

Johannes Hahn is Budget Commissioner in the EU Commission.

Johannes Hahn is Budget Commissioner in the EU Commission.Image: imago images / imago images

Under normal circumstances, Hungary is entitled to these 7.5 billion euros, which the EU wants to freeze, from the Community budget. However, the Commission sees the risk of corruption in the country as too great. One has to assume that EU funds are not sufficiently protected in Hungary, said Budget Commissioner Johannes Hahn in Brussels.

Problems with corruption and nepotism in Hungary have been known for a long time. The EU has created its own authority for such cases – it is called OLAF, European Anti-Fraud Office in German. This anti-corruption agency investigates cases of fraud against the EU budget – such as corruption.

This authority has been investigating the case of Hungary for years. The result so far: transfers from the Brussels community budget seep into dark channels. It is not uncommon for these funds to go quite openly to friends and family members of Hungarian Prime Minister Viktor Orbán.

Budapest, December 2014: In the past there have always been demonstrations against corruption in Hungary.

Budapest, December 2014: In the past there have always been demonstrations against corruption in Hungary.Image: imago stock&people / imago images

There are also inconsistencies when it comes to contracts paid for by the EU and advertised by the Hungarian state: They are usually formulated in such a way that very specific company fit it perfectly. An example: New street lamps should be set up nationwide. A company in which Orbán’s son-in-law is active received the order.

Companies close to the opposition actually have no chance of being awarded a lucrative contract by the state.

What does rule of law mean?

The rule of law actually means that powers are divided in a democracy: the legislative force (legislative), the judicial power (judiciary) and the executive power (executive). Freedom of the press must also be protected. Some even see the fourth estate of a constitutional state in the free press – the public.

In order to become a member of the European Union, the EU defined criteria in 1993: the Copenhagen criteria.

The criteria formulated by the EU in Copenhagen describe the requirements that a country must meet if it wants to join the EU. At the same time, they require the ability to adopt all of the EU’s laws and policies for one’s own country.

There are these criteria:

  1. political criterion
    Institutional stability as a guarantee for democracy and the rule of law, for the protection of human rights and the respect and protection of minorities.
  2. economic criterion
    A functioning market economy and the ability to withstand competitive pressures and market forces within the EU.
  3. acquis criterion
    The ability to take on all the obligations of membership – i.e. all the law and policies of the EU (the so-called “acquis communautaire”) – as well as the agreement with the goals of political union and economic and monetary union.

The fight against corruption is mainly related to the rule of law.

How did the dispute over the rule of law develop?

The global trend is currently going back towards autocratic states. Also in Europe. Hungary is a pioneer here. Because the principles of the rule of law are increasingly at risk in some EU countries, the EU has introduced stricter mechanisms for checking and punishing violations.

In 2020 you then focused on the “Mechanism to uphold the rule of law” agreed. This allows the EU to suspend payments to member states if they violate the rule of law.

Hungary and Poland have appealed against the introduction of this mechanism – and lost in the European Court of Justice. He dismissed the lawsuit in February of this year.

Two who get along well: Hungary's Prime Minister Viktor Orbán (left) and Poland's Prime Minister Mateusz Morawiecki.

Two who get along well: Hungary’s Prime Minister Viktor Orbán (left) and Poland’s Prime Minister Mateusz Morawiecki.Image: / imago images

But even before that happened, the Commission had to make preparations to actually let this mechanism work: Because of Poland’s and Hungary’s continued violations of the rule of law, a corresponding letter was sent to the two countries, listing all the abuses and deficiencies in the rule of law, budget control and the fight against corruption.

The rule of law mechanism allows Brussels to actually cut subsidies for Poland and Hungary. That started in January of this year: The EU Commission demanded that Poland pay a fine of 69 million euros – one million a day.

Is Hungary still a democracy?

In fact, the European Parliament has now denied Hungary’s democracy status. “Among experts” there is increasing agreement that “Hungary is no longer a democracy,” according to a non-binding resolution approved by the majority of MPs in Strasbourg.

Instead, Hungary is now referred to as a “hybrid system of electoral autocracy,” the report says. The EU’s inaction has also “contributed to the collapse of democracy, the rule of law and fundamental rights in Hungary”. The Hungarian government is trying to deliberately and systematically undermine the fundamental values ​​of the EU treaties.

The European Parliament has long criticized Orbán’s right-wing government. As early as 2018, MEPs initiated proceedings under Article 7 of the EU treaties against Hungary because they saw threats to democracy, the rule of law and fundamental rights in the country. However, the procedure, which could end in the withdrawal of voting rights in the Council of Ministers, has come to a standstill in the Council of EU States.

What’s next?

Poland spoke up on Monday and stepped into the breach for Hungary.

The Central European country wants to resist the planned cut in EU funds for Hungary. “Poland will resist with full force any action by the European institutions aimed at illegally depriving a Member State of funds – in this case Hungary in particular,” said Prime Minister Mateusz Morawiecki.

However, there are signals from Budapest and Brussels that a solution to the dispute is being worked on.

(With material from the dpa)

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