Hungary Passes Judicial Reform to Unlock Frozen EU Funds

Hungarian lawmakers adopted changes to the country’s judiciary in the hope of gaining access to billions of euros in EU funds. While Brussels welcomed the reform steps, it indicated Hungary needed further reforms to unlock EU cash.

Hungarian lawmakers passed measured related to the reform of the judiciary this week in the hopes of unlocking more than EUR13 billion in EU funds for the country at a time when the economy is faced with low growth and rampant inflation. The amendments are designed to comply with rule of law demands from the European Union, which cited concerns over the independence of the courts, which EU officials claim has been compromised by the government of Prime Minister Viktor Orbán. The reform aims to strengthen independence on several fronts; by ensuring that the National Judicial Council, a judiciary watchdog, remains independent as well as by reforming the Supreme Court and the Constitutional Court to shield them from political influence and to allow cases to be referred to the European Court of Justice for preliminary rulings. The independence of the judiciary was one of the reasons the EU decided to block Hungary’s access to the funds. The freeze is hurting the Hungarian economy, which suffers from a slowdown in growth and inflation of over 25%, the highest in the EU. Economic difficulties have pushed Budapest to intensify negotiations with Brussels in order to restore the flow of cash. The judicial reform is part of those efforts.
“If the judiciary independence case is settled, it unlocks the huge majority of the cohesion programs,” EU Budget Commissioner Johannes Hahn told journalists last week.

Promising first steps
“Hungary has now fulfilled its commitments regarding the administration of justice. We expect Brussels to pay EU funds due to Hungary,” said Justice Minister Judit Varga after the vote.
At the same time, Amnesty International Hungary, the Eötvös Károly Institute and the Hungarian Helsinki Committee stated that while “the adoption of the judicial reform package is essential for Hungary to gain access to EU funds; however, the current legislative process fails to meet the milestones’ requirements of public transparency and consultations.”
While the recently passed legislation addressed some of the wider EU concerns over the erosion of the rule of law, civil liberties, and systemic corruption, Brussels seems to demand more steps from the Orbán government. Věra Jourová, European Commission vice-president for values and transparency, said the Hungarian parliament’s decision was a “very good step forward” but more information was needed on other reforms necessary for the release of recovery funds. She told reporters that it was “too early” to release EU funding without further clarity about the EU’s other concerns.
The Commission is also withholding payments because of a Hungarian anti-LGBTQ law that the EU institutions and most of the bloc’s member states have filed a case against at the European Court of Justice on the grounds that it discriminates against people on the basis of their sexual orientation and gender identity. In addition, provisions that pose “serious risks to academic freedom and the right to asylum” are also among the reasons why Brussels is withholding the funds.
The EU will only start paying cash to Budapest from the Covid-19 recovery fund once Hungary meets more than two dozen “super milestones” relating to rule of law issues — only some of which have been addressed by the recently passed legislation.