Interest money

EU moves to cut funds for Hungary due to deterioration of democracy

The European Union executive on Sunday recommended suspending some 7.5 billion euros in funding for Hungary over corruption charges, the first such case in the 27-nation bloc under a new sanction designed to better protect the country. rule of law.

The EU introduced the new financial sanction two years ago precisely in response to what it says amounts to undermining democracy in Poland and Hungary, where Prime Minister Viktor Orban has subdued the courts, the media, the NGOs and academia, as well as restricting the rights of migrants, gays and women for more than a decade in power.

“These are breaches of the rule of law undermining the use and management of EU funds,” said EU Budget Commissioner Johannes Hahn. “We cannot conclude that the EU budget is sufficiently protected.”

He pointed to systemic irregularities in Hungary’s public procurement laws, insufficient safeguards against conflicts of interest, weaknesses in the effectiveness of prosecutions and shortcomings in other anti-corruption measures.

Hahn said the Commission recommended the suspension of around a third of the cohesion funds envisaged for Hungary from the bloc’s shared budget for 2021-27, worth a total of 1.1 trillion euros.

The €7.5 billion in question represents 5% of the country’s estimated GDP in 2022. EU countries now have up to three months to decide on the proposal.

Hahn said Hungary’s latest pledge to respond to EU criticism was an important step in the right direction, but still needs to be translated into new laws and practical actions before the bloc is reassured.

Corruption

Orban’s government has proposed creating a new anti-corruption agency in recent weeks as Budapest has come under pressure for cash for the struggling economy and the forint, the worst-performing currency in eastern the EU.

Orban, who calls himself a “freedom fighter” against the liberal West’s worldview, denies that Hungary – a former communist country of around 10 million people – is more corrupt than other countries in the EU.

The Commission is already blocking some €6bn of funds planned for Hungary as part of a separate COVID economic stimulus for the same corruption concerns.

Reuters documented in 2018 how Orban funnels EU development funds to friends and family, a practice which human rights organizations say has immensely enriched those around him and empowered the man 59 years old to entrench himself in power.

Hungary recorded irregularities in almost 4% of spending of EU funds in 2015-2019, according to OLAF, the bloc’s anti-fraud body, by far the worst result among the 27 countries of the EU.

Orban has also rubbed many in the bloc the wrong way by cultivating close and ongoing ties with President Vladimir Putin and threatening to deny the EU unity needed to impose and preserve sanctions on Russia for leading a war against Ukraine.