The EU and Hungary agreed on the news of the funds. Last Minute GERMANY, France, Netherlands, Russia headlines and events
Arm wrestling between Hungary and the European Union, whose EU funds were suspended due to non-compliance with the rule of law and insufficient fight against corruption, ended in an agreement.
The EU has opened a suspended €13.3bn Hungarian fund on the condition that it “keeps reforms going”.
Viktor Orban’s administration, in turn, lifted its veto on aid to Ukraine and international tax reform laws.
The Budapest administration, which vetoed 18 billion euros in aid to Ukraine due to the suspension of the 13.3 billion euros fund by the EU Commission, will be able to receive part of the fund with a commitment to “complete reforms regarding the rule of law.” “Thanks to the deal.
The EU ambassadors, after a meeting that lasted until late in the evening, to save 6.3 billion of the 7.5 billion euros of the development fund to be transferred to Hungary under the EU’s 750 billion euro rescue plan, but which was frozen; decided to send the remainder to Hungary.
The ambassadors also approved the allocation of 5.8 billion euros to Hungary as part of assistance in connection with the Covid-19 pandemic.
In response, the Budapest administration lifted a veto on financial assistance to Ukraine in 2023 with payments of 1.5 billion euros per month and on a reform that would introduce a “15 percent tax” on multinational companies.
Thus, the crisis managed to prevent the transition to the summit of leaders, which will be held on December 14-15.
The EU, which wanted to maintain its unity against Moscow, gave “conditional” approval to Hungary’s demands to avoid the appearance of a crisis or struggle that the blockade would cause.
On the other hand, EU funds are vital for Hungary, which has the highest inflation rate in the EU (25 percent) and is one of the countries hardest hit by the economic crisis.
Moreover, if this agreement is not reached, Hungary risks losing 70 percent of the said aid.
arm wrestling months
Following the re-election of Hungarian Prime Minister Viktor Orban in April, the EU Commission activated for the first time a “conditional mechanism” that ties funds transferred to member states in line with EU values.
The commission has called on the government of Viktor Orban, known for its closeness to Russia and criticized for being too tolerant of domestic corruption and undermining the independence of the judiciary, to introduce 17 legal reforms.
The government implemented some of these 17 reforms, but the EU Commission considered these reforms insufficient and put in place a “conditionality mechanism” for Hungary.
To this, Hungary responded by vetoing aid to Ukraine and international tax reform, which the EU wanted to carry out as a matter of urgency. Regarding the aid package to cover Ukraine’s budget deficit for 2023, Budapest has opposed raising money in the markets and has said it prefers to provide assistance to Ukraine on a bilateral basis under the EU package.
Conditions for reform
The European Parliament and countries such as the Netherlands, Finland and Poland have defended the decision to freeze aid to Hungary, which violated the rule of law.
Countries led by Germany and France, who do not want a new crisis in the EU preparing for harsh winter conditions, have asked the EU Commission to reconsider this decision.
At the end of inter-capital talks that continued over the weekend, the EU Commission relented, albeit conditionally, and unblocked some of Hungary’s funds.
In the agreement reached by the EU ambassadors, the opening of the funds was conditional on Budapest’s continued reforms and legal action in a total of 27 areas, including 10 new reforms.
These include reforms to strengthen the independence of the judiciary, new rules for monitoring and reporting on EU funds, the creation of new independent anti-corruption bodies and the introduction of stricter rules to eliminate conflicts of interest.
Budapest must adopt these laws within 2 years at the latest in order to continue receiving EU funds.
Return from the EU Commission
This decision means keeping 45 percent of EU funds, 6.3 billion euros, and transferring the rest to the treasury of Budapest.
The Hungarian prime minister will be able to invest in the country’s infrastructure with the funds that have opened, but 6.3 billion euros will be postponed for now, and Hungary will be freed “when it really fights corruption, when public procurement is transparent and judges are independent.” “.
While this reconciliation marks a “step back” for the European Commission, it is seen as a “success” for Viktor Orban, who is effectively using his veto weapon.
Despite these assessments, budget commissioner Johannes Hahn called the decision taken by the EU ambassadors “a great moment for the rule of law and EU funds!” described as.
“The first use of the conditioning mechanism was effective and structural improvements were achieved,” Khan wrote on his Twitter account.
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