Hungary has not accepted the rule of law reforms demanded by the European Union, including a number of anti-corruption measures and increased transparency in the use of EU funds. That’s the conclusion of the European Commission, which is now passing the hot potato to member states, who will have to decide whether to release 7.5 billion euros from Europe’s multiannual budget for 2021-2027. billion in Budapest of the next generation. The frozen funds await concrete commitments from Viktor Orbán’s government on 17 reform packages.
Why are funds suspended?
What member states will decide is likely to be known when finance ministers meet on December 6 next year to decide whether to introduce the rule of law mechanism (which would be the first time). and possibly impose sanctions on countries that do not respect the fundamental principles of the EU. In the specific case of Hungary, the Commission was primarily interested in the way Budapest manages public resources, starting from Europe.
Hungary is one of the main net beneficiaries of the Community budget, together with Poland, Romania and Greece: it receives more resources from the EU (and other net contributing Member States such as Germany, France and Italy). pays. In other words, the money of German, French and Italian taxpayers flows into the coffers of Budapest. This has been happening since Hungary joined the EU and will continue for the current budget, which ends in 2027.
As seen in the Commission’s memorandum on which the decision to suspend 7.5 billion of the multiannual budget is based, various elements suggest that the ever-increasing violations of the rule of law, especially in the field of justice, feed a very special system of power through procurement. For example, the Commission’s Directorate-General for Budget commissioned a study on “over 270,000 Hungarian public procurement contracts between 2005 and 2021”. This period covers the period before Orban (2005-2010) and the period after Orban (2010-2021).
According to the study, before the arrival of the Hungarian leader (or rather his return, given that he was prime minister before 2005) “the likelihood of obtaining public contracts (both national and EU-funded). companies that could be considered politically connected (to the majority government, editor’s note) were 1.5-2.1 times more likely to succeed than companies without political connections”. With the arrival of Orban, this probability increased to 4.4. In other words, up to 4 out of 5 government contracts went to contractors politically close to the Hungarian leader and his party and government cronies. The alleged friendship goes hand in hand with a lack of transparency in the handling of the funds, which has led to various frauds: the latter, a few days ago, forced Olaf, the EU’s anti-fraud agency, to ask Budapest to recover some 11 million in error. the waste treatment plant endangers the health of the local population.
What will Meloni’s government do?
As we said, the Commission has done its job. It is now up to the EU governments to decide whether to provide financial aid to Hungary. The first sign of what was to come came from the European Parliament, which overwhelmingly approved a resolution calling on member states to “resist pressure from Hungary and continue to accept the proposed rule of law condition to end the union.” of EU funds”, that is, the above-mentioned 7.5 bln.
Among the supporters of the resolution were Forza Italia members of the European Parliament (with the exception of Massimiliano Salini), the Brothers of Italy and the League, who opposed the demand. The Italian government therefore seems divided. A qualified majority is needed to implement the suspension of funds for Hungary. Orban will likely have Poland on his side. But it is clear that Italian support could be essential to avoid European failure. It’s not that the Hungarian leader doesn’t have other defenses: Budapest has vetoed important EU decisions such as € while waiting to receive the coveted European money (including the Pnrr, which is about 4% of GDP). 18 billion in macro-financial assistance to Ukraine and an agreement on the global minimum corporate tax rate. In addition, he threatened not to ratify the accession of Sweden and Finland to NATO together with Turkey.