European Commission Proposes to Cut Funds to Hungary

The European Commission, the quasi-government of the European Union, calls for an estimated EUR 7.5 billion in EU funding to be withheld from Hungary over corruption concerns that the Hungarian government failed to dispel.

Referring to EC President Ursula von der Leyen's State of the Union address earlier this week, EC Commissioner Johannes Hahn, in charge of Budget and Administration, said this Sunday the Commission will also protect the EU budget through the conditionality mechanism.

"In exactly this spirit, the Commission is proposing measures to the Council for the protection of the Union budget against breaches of the principles of the rule of law in Hungary," the Commissioner pointed out.

He added that this case started when the Commission notified Hungary in April earlier this year about its concerns relating to breaches of the principles of the rule of law that create a risk, and it is important because it is about the scope, for the EU budget. These concern:

• systematic irregularities and deficiencies and weaknesses in public procurement;
• insufficiencies in addressing conflict of interest and concerns regarding public interest trusts;
• weaknesses in the effective pursuit of investigations and prosecutions in cases involving Union funds;
• and shortcomings in the anti-corruption framework.

Over the summer, Hungary committed to 17 remedial measures to address the risks to the EU budget. "To consider these remedial measures to be ‘adequate', the Commission needs to be able to conclude that they will put an end to the identified risks for the EU budget and EU financial interest," Johannes Hahn stressed.

He highlighted that "Therefore, the Commission's assessment is that a risk for the budget at this stage remains. Therefore, we cannot conclude that the EU budget is sufficiently protected. The Commission has therefore proposed measures to the Council, pending the fulfilment of key implementation steps. The Commission proposes a suspension of 65% of the commitments for three operational programmes under cohesion policy, amounting to an estimated EUR 7.5 billion – which is over a third of Hungary's Cohesion envelope, and the prohibition to enter into legal commitments with the so-called public interest trusts. The measures take into account the remedial measures Hungary submitted."

The Commission will now monitor the situation. "Hungary has committed to fully inform the Commission about the implementation of the remedial measures by 19 November, as also outlined in the timeline published in our proposal," the Commissioner said.