The European Commission plans to propose a cut in Hungary’s EU funds for rule of law reasons, while opening the door to a compromise.
The decision, expected on Sunday, would represent the next step in a long process designed to keep EU members in line with democratic standards.
The EU has never been so close to withdrawing budget funding from a country due to such fears over the rule of law. Yet since coming to power more than a dozen years ago, Hungarian Prime Minister Viktor Orbán has faced criticism from civil rights groups and international institutions for undermining democratic standards.
One of the EU’s concerns is corruption, in particular the embezzlement of public funds to enrich figures close to the ruling party, Fidesz. Brussels has long argued with Budapest over the issue, and in April the Berlaymont triggered a mechanism for the first time that could cost the country billions.
This Sunday, the Commission is expected to take the next step in this process by formally proposing to the EU Council to suspend a significant part of Hungary’s EU budget funds, according to two people familiar with the process. The reason: serious problems with public procurement, which the Commission concluded constituted a violation of the principle of the rule of law.
But there is a caveat: the Commission is also prepared to acknowledge that the Hungarian authorities have in recent weeks proposed a series of reforms which could – if properly designed and implemented – address some of the concerns of Brussels.
The Berlaymont should thus communicate to European capitals that they could choose to give Budapest an opportunity to prove that it is serious about reforms, before taking a final decision on the suspension of funds.
The Commission is expected to adopt a “very sober and severe assessment of shortcomings”, but it is “necessary to take into account that Hungary has moved in the right direction and taken the first steps” towards reforms, an official from EU, who spoke on condition of anonymity.
While acknowledging that confidence in Hungary has been “eroded” and that the concerns are “systemic in nature”, the official said it would be up to the Council to decide whether to give Hungary “a chance to to prove himself”.
Once the Council receives the Commission’s proposal, it has one month to take a decision, with the possibility of extending the deadline by up to two months.
Orbán’s government has said it is willing to create a new anti-corruption authority, as well as a new anti-corruption task force and a framework to assess public procurement procedures.
And while Hungarian civil society groups have said they have serious concerns about whether the government’s proposals will actually improve its anti-corruption performance, the Commission and EU capitals appear to be willing to give Orbán the chance to avoid losing his funding.
“The Commission is quite happy with the proposals made by Hungary, but we all want them to be real,” said an EU diplomat. By proposing a suspension of funding, the diplomat said, “the Commission is keeping the pressure on” on Hungary.
But, added the diplomat, “it is natural to give the Hungarians time”.