Hungary faces €7,5bn cut in EU subsidies

Hungary and Poland receive large amounts of subsidies from EU funds. At the same time, the European Commission suspects that the lion's share of these funds in Hungary goes to entrepreneurs associated with the government of Viktor Orban. As a move against corruption and fraud in the country, back in April, Brussels launched a “rule of law mechanism”, and as a result, Hungary risks missing out on billions of EU subsidies, which could harm every Hungarian family.

European Commission recommendations

On September 18, the European Commission proposed do not allocate 65% of funds to Hungary for three programs from a key EU fund due to non-compliance with the principles of the rule of law in the country. The application of such a measure is considered for the first time in the history of the EU. The procedure for approval of the recommendation of the European Commission by the EU member states is still ahead.

The sanction is meant to force Prime Minister Orban to take action against corruption and fraud with EU money. We are talking about the funds of European taxpayers, which should not fall into the wrong hands.

The commission has targeted three programs that have seen manipulation in recent years. Commissioners fear that money paid to the Hungarian government to improve the situation in the country could end up in the hands of Orban's friends. Payments for the rest of the programs will remain in full, since there are no violations in their redistribution (this applies to billions in agricultural subsidies).

EU money in Hungary

In recent years Hungary has been reprimanded several times for massive corruption. Entrepreneurs associated with Orban enrich themselves with state funds: public tender procedures for EU-funded projects are designed in such a way that only large companies from Orban's entourage have a chance to win. The government centrally manages the EU's billions: the same ministry that decides who gets EU money and then controls how that money is spent. In addition, pressure on independent media and courts has increased in recent years.

Against the backdrop of these circumstances The European Commission in April decided to launch a “rule of law mechanism” against Hungary. This is an exceptional measure that the EU can use if the rule of law is not respected somewhere. If there is no change after several warnings, part of the EU subsidies for the country may be withdrawn. Depending on how big the problems are in the country, it determines how much money is withheld.

At the same time, Orban pays little attention to criticism from Brussels. He sees the "rule of law mechanism" as a means of imposing non-conservative norms on Hungary: “For them, the law is a means of shaping us in their image. But we don't want to be like them.".

Hungary, together with Poland, which is also threatened by the “rule of law mechanism”, filed last year lawsuit against the European Commissionto disable this procedure. However, in mid-February, the European Court ruled against Hungary and Poland, which gave the Commission free rein to launch the mechanism against the countries.

"Rule of Law Mechanism"

Let us briefly consider how the “rule of law mechanism” works.

1. When a country fails to comply with the European rule of law, the European Commission sends it a formal warning letter. The country must respond to this within three months.
2. If the situation in the country does not change, the Commission makes a proposal to stop the payment of funds from the EU budget - in whole or in part. The Member State must respond to this within one month.
3. Then the Commission sends a proposal to the EU countries, and within two months they finally determine whether money will be sent from the EU budget, if so, how much.

Last Chance

The European Commission announced 17 legislative measuresthat Hungary must meet in order to maintain subsidies. In response, Hungary stated that it would implement these measures. "We've made an agreement that we can honorMinister Navracic said. We will not lose subsidies.

According to the European Commission, Over the past two months, there have been positive developments in the country, so European Commissioner Johannes Hahn hopes that Hungary will make the necessary amendments to the laws. For example, an anti-corruption unit should be set up in the country, and companies, organizations and individuals using EU money should be made public. If Hungary takes all these measures before November 19, it still has a chance to receive billions of euros.