On 15 September, the European Parliament adopted a report recognising that Hungary can no longer be considered a democratic country, and that the lack of action by the EU has contributed to its becoming a “hybrid regime of electoral autocracy”. As a result, the Commission is proposing to the EU Council to implement the principle of conditionality and thus suspend €7.5 billion of EU funds to Hungary, which is 65% of the EU’s commitments under the cohesion policy programmes.

Hungary would be the first country to be affected by the implementation of the conditionality mechanism, which is applicable since January 2021. The Regulation on a general system of conditionality for the protection of the Union budget allows the Union to suspend payments to Member States in cases where violations of the principles of the rule of law may affect the financial interests of Europe. The payments are mainly focused on programmes that are heavily reliant on public procurement and thus most vulnerable to corruption.

During her State of the Union speech, Ursula Von der Leyen announced that she was taking the rule of law and the fight against corruption very seriously. “If we want to be credible when we ask the candidate countries to strengthen their democracies, we must also eradicate corruption at home,” she said.

Hungary has already proposed anti-corruption reforms this summer, but the details and means of implementation are not yet defined, so the Commission is wary. Nevertheless, it is giving Hungary two months, instead of the one foreseen in the texts, to implement them. After that, it will be up to the Council to decide, by qualified majority, which only requires the agreement of 15 states representing 65% of the European population.

Source: EU Commission proposes to cut €7.5 billion funding to Hungary