Hungary May Face Further Delay in EU Fund Payments as Tug-of-War Continues

The Hungarian government initially pledged to complete the most important tasks needed to release the funds withheld by the European Union by March 31, this ultimately failed. Brussels is seeking clarification on several issues related to the judicial reform and Hungary has yet to tackle the conflict of interest rules in the Erasmus case. If the negotiations run into further stumbling blocks, the release of EUR 22 billion in cohesion funds may not take place this year, putting a strain on Hungary’s ailing economy.

The Hungarian government and the European Commission both agreed to waive the March 31 deadline in the negotiations on the rule of law procedure. The government has undertaken to submit the judicial reform to social consultation and to ratify it by the end of the month. This is a key piece of legislation in the dispute between the two sides and may very well prove the dealbreaker in the issue. According to sources interviewed by news portal Portfolio.hu, Budapest and Brussels may reach an agreement on the controversial issues in the judicial reform “soon.”

Erasmus case also on agenda
Another critical matter that the two sides need to agree on is the Erasmus issue. In early January, the European Commission suspended the right of several Hungarian universities to receive grants in the Erasmus+ and Horizon Europe mobility programs. The decisions effects universities that were transferred to so-called “public trust foundations.” These trusts are run by boards of trustees which include many figures associated with Orbán’s regime, including members of the current government.
Following the EU’s decision, Hungary offered to exclude members of parliament, ministers, state secretaries and government commissioners from the boards of trustees managing these universities and research institutes. However, Brussels rejected this proposal and requested that persons with public authority status be excluded from the range of persons who can be appointed. This would technically apply not only to heads of state administration but also to members of the wider government. The two sides are also in disagreement regarding the length of the mandate these board members would hold.

More social consultation needed?
According to Portfolio.hu’s sources in the EU, the Commission may expect Hungary to hold another round of public consultation on the judicial reform as the draft was heavily revised in light of criticism from local civil society organizations and the Commission itself. The first version of the draft was introduced in January by the Ministry of Justice and Justice Minister Judit Varga attended a round of social consultation, where Hungarian civil society organizations expressed their criticism. The Commission is still waiting for answers to its clarifying questions.
In addition, the EU may request Hungary to hold social consultations in the Erasmus case as well.