Hungary Sees Deal Near to Help Unlock €28 billion in EU Funds

Hungary said it’s near an agreement with the European Union that would bring it a step closer toward accessing almost €28 billion ($30.5 billion) in funds frozen over concerns about the rule of law and fundamental rights.

(Bloomberg) — Hungary said it’s near an agreement with the European Union that would bring it a step closer toward accessing almost €28 billion ($30.5 billion) in funds frozen over concerns about the rule of law and fundamental rights. 

The EU’s executive arm is expected to respond to Hungarian proposals on key judicial reforms early next week, according to Janos Boka, Hungarian Prime Minister Viktor Orban’s envoy to the EU. If approved, they could be ratified by Hungary’s parliament in mid-April, clearing a major hurdle toward unlocking 5.8 billion euros from the EU’s pandemic recovery plan in the second half of this year.

“We are very close to an agreement,” Boka, who’s also secretary of state at the Justice Ministry, said in an interview. “We don’t see any open political questions remaining.”

Discussions on an agreement are progressing and a deal could be reached in the coming days, according to an EU official familiar with the talks, who spoke on condition of anonymity because the talks aren’t official. European Commission spokesman Christian Wigand said negotiations are ongoing.

The EU surprised Orban by freezing the recovery funds last year in a bid to force him to reverse a series of laws and constitutional changes that the commission said undermined judicial independence and the rule of law. 

In a separate process, it withheld €22 billion in so-called cohesion funds over concerns about issues including judicial independence and the failure to comply with the EU Charter of Fundamental Rights on issues including LGBTQ rights, academic freedom and the right to asylum.

The decisions were the culmination of a dispute in which Orban — a nationalist firebrand who has become a model for far-right movements worldwide — has both lambasted Brussels for overreach into Hungarian matters while also using billions of euros in EU aid to finance a self-styled “illiberal democracy” that spurns the bloc’s liberal values.

Strings Attached

The commission set 27 key conditions for Hungary, known as super-milestones, that cover remedial measures to address concerns related to the use of EU cash and to unblock the recovery funds, including four requirements for the judiciary.

Boka said that the work on the remaining demands was not progressing “as fast as one would hope” because “we see new concerns popping up on behalf of the commission from time to time, which further complicate the process.” 

One of the stumbling blocks is the issue of trust funds that Orban’s government established to manage universities — which he has named party loyalists to run — and the cooling off period for board members appointed from his administration. Both the EU and education advocates have criticized the institutions as an attempt by Orban to assert control over academic freedom in Hungary.

Boka said he expected Hungary could access its recovery funds in the third quarter of this year. “But for this, the speed of the process needs to be accelerated,” he said. The agreement on judiciary reforms “would go a long way in building the necessary political trust.”

Under changes agreed on with the commission that could still require tweaks, Hungary will reinforce the powers of the judge-led National Judicial Council, including for its ability to give binding opinions on some decisions and in electing a Supreme Court president.

Budapest will also introduce an automatic case allocation system at the Supreme Court to limit the risk of political influence, remove all obstacles for judges to refer questions to the European Court of Justice and limit the possibility of public authorities submitting complaints to the Constitutional court, Boka said.

The changes could also help Hungary unlock the 22 billion euros earmarked for cohesion funds, Boka said.

“We understand that by implementing these four super-milestones, we also meet this so-called horizontal enabling conditions that would open up the possibility to have access to EU funds from the cohesion side,” Boka said. 

–With assistance from Stephanie Bodoni.

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