EU member states have decided to suspend some €12 billion of EU funds earmarked for Hungary pending reforms, an amount below what the Commission was advocating and which is part of a compromise with Budapest.
This sum includes 6.3 billion from cohesion funds and 5.8 billion from the post-Covid recovery plan.
The agreement reached on Monday evening in Brussels by the ambassadors of the Member States made it possible to lift Hungary's blocking of the granting of macro-financial aid of 18 billion euros to Ukraine and a minimum tax of 15% for large companies.
In detail, the Council (institution representing the Member States) decided to suspend 6.3 billion of cohesion funds which were to be paid to Hungary within the framework of the 2021-2027 budget, within the framework of a European mechanism – called “
conditionality
” – never used before, and intended to protect the EU budget from the risk of corruption.
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The European Commission had recommended freezing €7.5 billion of cohesion funds, but Member States reduced this amount to take into account "
the corrective measures that have been satisfactorily implemented by Hungary
" and its “
degree of cooperation
”.
Anxious to avoid a freezing of funds, Hungary has undertaken to implement 17 measures to respond to Brussels' concerns, in order to strengthen the fight against corruption and improve transparency in the field of public procurement.
Overall, however, like the Commission, the Member States consider that the reforms carried out so far "are
not sufficient to remedy the breaches of the rule of law found and the risks they entail for the Union budget
".
“Success for the EU”
In addition, member states approved Hungary's post-Covid recovery plan (€5.8 billion in grants), while making the disbursement of funds conditional on the achievement of 27 "super milestones", including
the
17 anti-corruption measures as well as reforms to improve the independence of the judiciary.
Without approval of this plan before the end of the year, 70% of these subsidies would have been lost.
With this decision, these funds are only frozen.
Hungarian Justice Minister Judit Varga welcomed a "
success for the whole of the European Union
" and expressed confidence in her country's ability to obtain the release of the suspended funds.
“
Hungary has kept its commitments, and we are on the right track to achieve in the future the objectives and the promises that we have put on paper
,” she commented on arriving at a ministerial meeting in Brussels on Tuesday.
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French Secretary of State for European Affairs Laurence Boone felt that a "
good balance
" had been struck "
between the strength of the rule of law
" and the need to "
take note of the progress
" made by Budapest
. conditionality mechanism is proving its worth
,” she said.
His German counterpart Anna Lührmann welcomed a “
historic moment for the protection of the rule of law
”.
On the European Parliament side, the president of the main group, the EPP (right), Manfred Weber also welcomed a “
good day for European taxpayers
”.
"
The message is also that (Hungarian Prime Minister Viktor) Orban cannot blackmail the EU, it won't work
," he said.
MEP Daniel Freund (Greens) regretted that the frozen amount was "
too low
", while rejoicing that "
Member States have finally agreed that Viktor Orban has gone too far
".
Until the compromise found on Monday evening, the Hungarian nationalist leader opposed the adoption of the common aid plan for Ukraine of 18 billion euros for 2023, saying he preferred to pay bilateral financial aid to Kiev.
The agreement reached also makes it possible to unlock the implementation by EU Member States by the end of 2023 of a minimum tax of 15% on the profits of multinationals concluded within the OECD.
