Cutting EU funds for Hungary – a feint, not a blow

When, in an almost entirely symbolical gesture, the European Parliament branded Hungary no longer a democracy, the European Commission followed up by proposing cutting the cash the country receives out of the EU budget.

On Sunday, EU Budget Commissioner Johannes Hahn proposed to halt some €7.5 billion in payments out of the Cohesion Funds, or 65% of the total of that money earmarked for Hungary, meant to help the poorest regions in the EU.

The Commission can take such steps when it considers the EU budget at risk, using a mechanism that links payments to respect for democratic rules. And there was enough evidence, in Hahn’s words, who said Hungary was not doing enough to stop corruption, public procurement graft and weak enforcement.

So was this, at long last, some tough action after a decade of allowing Hungary to slide into what the Parliament now describes as a “hybrid regime of electoral autocracy” – which holds elections, but without respect for democratic standards, the rule of law, or human rights?

Well, not so fast. The Eurocrat finds that Commission’s proposal is containing so many “ifs” and “buts” that it is really just another warning, which, after some tough headlines, will allow Prime Minister Viktor Orbán to keep eroding whatever is left of democracy in his country.

First, the plan now goes to the Council of ministers, who need a qualified majority to freeze the funds and have a month to ponder their decision. In the past this was often a problem, because Poland, finding itself in a similar position as Hungary, would block the vote.

Truth be told, Hungary is more isolated than ever. Some of Budapest’s closest allies, such as Janez Janša in Slovenia and Mateusz Morawiecki in Poland are either gone, or deeply upset about Hungary’s too Moscow-friendly stance as fighting in Ukraine continues. The outcome of the voting is anybody’s guess – if you want to see what the chances are of Hungary to getting off the hook (and if you’re into that kind of thing) here’s a qualified majority calculator.

Even if the Council plays ball, the Commission may turn down the heat on its own plan. EU officials have already said the Commission will ask ministers to delay their decision – because “things could change”. Brussels is working with Hungary on a 17-point plan to improve, including setting up an independent “Integrity Authority” and an “Anti-Corruption Task Force”. In other words, the Commission is asking EU ministers to give Hungary just a bit more time to achieve what Brussels has been unable to for almost a decade.

If the Hungarian judicial system would be independent, and the rule of law in place, there would be no need for any new bodies whatsoever. By endorsing these new institutions, the EU is putting a patch on a wound, rather than curing the disease. What is worse: the cuts the Commission proposes leave agriculture subsidies untouched. And not only is this the most meaningful cash flow for Hungary, but also the most problematic, with the most evidence of corruption.

But cutting the subsidies would threaten food security in the country, with inflation rates already over the moon, so the Commission fears.

Brussels is also still negotiating about unlocking funds which Hungary is entitled to as part of Europe’s corona recovery efforts. If there is no agreement before the end of the year, Hungary would lose its right to the money. Brussels may ask it to put reforms to tackle corruption in place to qualify for the money, but nothing has been agreed upon. Incidentally, the money Hungary is hoping to get from these separate funds amounts to €7.2 billion.

When it comes to Hungary, the Commission’s bark once again is worse than its bite. For far too long, Brussels has subsidised Orban, even as he hollowed out the democratic principles his country needed to comply with in order to be let into the bloc. Rather than designing new legal instruments all the time, the Commission should just enforce the existing rules – which are very broad – and make sure that countries respect the Treaties.

What the Eurocrat will be also watching:

Minister will meet in Brussels on Tuesday to talk about last week’s State of the Union speech by Commission President Ursula von der Leyen. She launched a Hydrogen Bank, committed to fighting foreign interference and unveiled her long-waited view on how to tackle the energy crisis. Keep an eye on the meeting if you want to know what EU countries make of her plans.

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