Hungary Loses EUR 1 Billion in EU Funds Amid Rule of Law Dispute

Hungary has permanently lost EUR 1 billion (USD 1.03 billion) in European Union funds due to its failure to address corruption, marking an unprecedented move by EU authorities in Brussels. This decision represents the first enforcement of such measures in the bloc’s history.

The European Commission announced Wednesday that Hungary had forfeited EUR 1 billion in funding over breaches of rule of law standards. Previously, the EU had urged Hungary to amend its laws to combat corruption and resolve conflicts of interest. Budapest was warned that it must implement reforms by the end of 2024 or face losing the funds permanently.

The case dates back to 2022, when the EU initiated “conditionality” proceedings against Hungary, citing violations of public procurement rules and a lack of transparency and oversight. Despite agreeing to partial reforms that allowed the release of some funds, Hungary still faces the freeze of a significant EUR 19 billion ( USD 20 billion) from EU post-pandemic recovery and other funds.

Under the EU’s conditionality regulation, the first EUR 1 billion tranche of suspended funds was set to expire at the end of 2024 without sufficient reform progress. A July report from the European Commission found Hungary falling short of EU democratic standards, highlighting corruption, political financing, conflicts of interest, and issues with media independence as key areas of concern.

Hungary’s legal battles with the EU are compounded by an ongoing procedure initiated in 2018, which seeks sanctions for “serious violations” of rule of law principles. This financial blow comes as Hungary’s economy struggles, with a technical recession following a 0.7% contraction in the third quarter. The budget deficit exceeded 4.5% of GDP last year, intensifying domestic political tensions.

Prime Minister Viktor Orbán, known for his close ties to U.S. President elect Donald Trump and Russian leader Vladimir Putin, has vowed to defend Hungary’s claim to EU funds. Orbán’s government also faces a EUR 200 million fine and daily penalties of EUR 1 million for failing to comply with EU court rulings on migrant acceptance policies. The frozen funds are unlikely to be released before Hungary’s parliamentary elections in spring 2026.

Reacting to the loss of EU funds, Hungarian Minister for EU Affairs János Bóka accused Brussels of using “political pressure” to advance its agenda. “The Hungarian government has met all conditions required to access all EU funds,” Bóka asserted on X (formerly Twitter), emphasizing that Hungary would not “lose a single euro cent” under its current government. However, the statement has done little to ease tensions or address the broader concerns surrounding Hungary’s governance.