Hungary at risk of losing billions of euros over latest EU move — Analysis

Budapest has responded by urging the bloc’s top body not to “punish” Hungarians for their political choices

New mechanism created by EU Commission could allow for billions in frozen funds to be allocated to the country. Since years, the EU Commission has been accusing Budapest of violating LGBT rights and undermining democracy.

Ursula von der Leyen, president of European Commission, spoke in Parliament on Tuesday. She explained how the European Commission has been working with the Hungarian leadership. “not been able to find common ground”concerning anti-corruption reforms. She added that Budapest’s response to formal notice from the European Commission on the matter did not leave the EU top body with any other option but to move on “to the next step.”

“The Commission has today spoken to the Hungarian authorities that we will now send a formal letter to start the conditionality mechanism,” she said, referring to the instrument adopted in late 2020 and allowing the bloc to withhold aid funding from a member that is found to be failing to adhere to the union’s democratic principles.

Two days before Viktor Orban won a fourth straight landslide victory for his Fidesz–KDNP party in the Hungarian parliamentary elections, the announcement about triggering the conditionality mechanisms was made. Such timing prompted Orban’s chief of staff, Gergely Gulyas, to call on the European Commission to accept “the basic rules of democracy” “not to punish Hungarian voters for expressing an opinion not to Brussels’ taste.” Gulyas was apparently referring to harsh criticism of Orban’s policies by the EU leadership.

EU nations lose legal battle in bloc’s top court

Johannes Hahn, EU Commissioner for Budget and Administration made clear that the EU intended to accelerate the implementation of this mechanism. Any suspension of funds will require additional negotiations and a qualified majority vote at the European Council. This process could last several months and the EU Commission will need to give details on specific cases where rule-of-law violations have directly contributed to Hungarian officials misusing EU budget funds.

It was created to protect the public from the effects of the virus pandemic. The mechanism was intended to provide a means of determining if the conditionality procedure is applicable. “an additional layer of protection in cases when breaches of the rule of law principles affect or risk affecting the EU financial interests.”

Hungary and Poland are the principal beneficiaries of the budgetary resources. Their challenge to the new process was rejected by the European Court of Justice in February. They claimed that the EU had the right to uphold its core values and link funds to members states for respecting the rule of law.

Poland and Hungary had always maintained that they were in favor of the “conditionality mechanism”It was not in the EU treaties. The ECJ is said to have overstepped its power by approving such a system.

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