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EU executive takes step to cut funds for Hungary over corruption

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By Reuters
EU executive launches new bid to cut funds for Hungary over corruption
EU executive launches new bid to cut funds for Hungary over corruption   -   Copyright  Thomson Reuters 2022

By Gabriela Baczynska

BRUSSELS -The European Union’s executive sent a formal letter to Hungary on Wednesday, officials said, the first step of a fresh offensive to safeguard democratic checks and balances that could freeze funds for Prime Minister Viktor Orban over corruption.

Despite years of criticism by rights campaigners that he was channelling EU funds to his associates, Orban won a fourth consecutive election victory earlier this month. The European Commission responded by launching a new sanction mechanism.

It has not been tested before and offers the strongest tool yet in the liberal EU core’s struggle against the nationalist Orban, the eurosceptics ruling in Poland and others accused of undercutting the rule of law.

“We identified issues that might be breaching the rule of law in Hungary and affect the EU budget,” said Vera Jourova, a deputy head of the Brussels-based Commission.

“Hungary will have to reply to our concerns and propose remedial measures.”

Senior EU officials said the case focused on systemic faults in Hungary’s public procurement that failed to prevent single bidding, conflict of interests and the risk of corruption.

“Serious concern” about the functioning of Hungarian authorities managing EU funds and controlling how Orban’s government spends the money was aggravated by limitations on effective investigation and independent prosecution, they said.

Hungary had irregularities in nearly 4% of its spending of EU funds in 2015-2019, according to the bloc’s anti-fraud office OLAF, compared to an EU average of 0.36%. Hungary also had the highest financial correction in the history of EU structural funds in 2019, according to the Commission.

But Budapest has not fixed the problem and the EU officials said corrections did not redress the continuous breaches of democratic principles over a decade. They declined, however, to name specific sums Hungary was standing to lose.

Orban’s chief of staff Gergely Gulyas said in a Facebook video that the Hungarian government would study the Commission’s letter and will give a detailed response on Thursday.

“We will study the letter and tomorrow we will give a detailed opinion at the government press conference with regard to …… what could be part of a compromise and what cannot,” he said.

Hungary has two months to respond to the letter from Brussels and it would take several more months of such exchanges before – unless an unlikely agreement emerges – the Commission proposes that EU states approve suspending funds to Budapest.

Rather than unanimity of all the other 26 EU countries required to met out punishment under the bloc’s previous rule-of-law battles with Orban, this time a majority of the other EU leaders would be enough to stop money from flowing.