We have no intention of not delivering on our commitments – Navracsics

Due to the breaches of the rule of law in Hungary, the European Commission (EC) is proposing the withholding of a huge amount of money from the country in order to protect the EU budget. The decision, however, is left to the Council of the European Union. This was announced by Johannes Hahn, the Commission's Budget Commissioner at a press conference on Sunday. If the Hungarian government implements its own commitments by 19 November, and the Council accepts those, there will be no cut.

If the Council accepts the Commission's proposals, it would mean that 65% of the funds for three Hungarian operational programmes would be held back from the country.

In other words, EUR 7.5 billion, or around HUF 3 000 billion would be blocked. This amount is equal to around a third of the cohesion funds for the budget period lasting up to 2027.

Hahn also mentioned that there were many problems with the Hungarian prosecution, judiciary and public procurement systems, but stressed that the Hungarian government was committed to important reform measures, which include the adoption of 17 new laws to fight corruption.

On the other hand, Hahn cited the creation of a new anti-corruption authority and the planned amendment of the Criminal Procedure Act as positive examples. The latter would mean that if the prosecution closes an investigation, a judicial review could be requested. The Commissioner said that these could be appropriate steps if they were properly translated into law and applied in practice. He indicated that, despite constructive negotiations, the risk of corruption remains present in Hungary.

According to a communique from the Representation of the European Commission in Hungary, the Council now has one month to decide whether to accept the proposed measures. A qualified majority is necessary for a decision. In case of exceptional circumstances, the Council may extend the deadline by up to two months. The Commission proposes that the EU Council wait until 19 November before making a decision, so that the Hungarian government can make substantial reforms.

The European Commission launched proceedings against Hungary under the rule of law mechanism back in April. Among others, it identified problems in the areas of public procurement, agricultural subsidies, financial oversight, accountability and corruption. A correspondence began between the government and the Brussels body, and after the summer break it was clear that the government was trying to meet the Commission's demands on several points. A resolution was adopted to introduce several new bills, including the creation of an anti-corruption authority.

The Commission had until 22 September to respond to the government's proposals, and they had two options: either to stop the procedure or to take the matter before the specialised ministers of the member states (the Council of the European Union). There have previously been press reports that the Commission will eventually opt for the latter option, and may even propose blocking 70 percent of the money intended for the budget period up to 2027 – which is €15.75 billion, or nearly 6.400 billion forints.

At the same time there have also been rumours that the Brussels body would acknowledge that the Hungarian proposals, if properly implemented, would partly address the Commission's concerns and could ask member states to give it some time.

Justice Commissioner Didier Reynders has recently also hinted that the case would not be closed, as he believes that the fate of the case depends mainly on the Council of the European Union. The body of ministers from member states now has a month to decide whether to block the funds or accept the government's proposals and stop the proceedings initiated under the rule of law mechanism.

Although the Rule of Law Mechanism is not linked to the EU's Recovery Fund (RRF), in practice it is unlikely that Hungary's plan will be approved until the mechanism is closed. So far, the Hungarian government's proposal for spending the money from the fund set up to deal with the economic crisis caused by the coronavirus epidemic is the only one which has not been accepted. In fact, neither the operational programmes funded from the 'normal' EU budget nor the partnership agreement that brings them together have been approved yet.

The Hungarian reaction

On behalf of the Hungarian government, Tibor Navracsics, the Minister responsible for EU funds, has spent the most time in talks with his Brussels counterparts in recent weeks.

At an event on Thursday, in response to a question from Telex, he said that "it is a realistic and expected approach that while they welcome the steps we are taking, they would also want to monitor this".

"You cannot abolish the rule of law procedure in one fell swoop."

– the minister stressed.

He also said that in his opinion, the Commission can be satisfied with the proposals made by the government so far, and even if the rule of law mechanism were to be brought before the Council of the European Union, he is confident that by the end of the year an agreement could be reached with the EU on the funds Hungary is entitled to. However, due to administrative delays, the earliest they can be accessed will be early next year.

Reacting to the European Commission’s Sunday decision, Tibor Navracsics, Minister in charge of EU funds said that the Government has no intention of not fulfilling the commitments it has made.

At a press conference on Sunday afternoon, the minister also said that the negotiations with the European Commission had been concluded, and that the Commission only had doubts as to whether the Hungarian cabinet would actually implement its commitments. He said it was absolutely certain that it would do so.

The Hungarian government does not want to see a situation like the one that arose between Poland and the European Commission over the withdrawal of funds, and will therefore remain in constant consultation with the Commission.

He said Sunday's decision was a step forward because it would open the way for the swift conclusion of the other pending procedures. He hopes that by the end of the year, a contract can also be finalised for the reconstruction fund (RFF).

In response to a question, he said that the Commission had not requested that Hungary join the European Public Prosecutor's Office. Navracsics listed the commitments made by the Hungarian government, the most important of which he said was the creation of an integrity authority for monitoring public procurement procedures funded by the EU. He added that the head of the authority will be appointed by an independent commission.

The necessary legislative initiatives will be submitted to Parliament this Monday and Friday, including the one about the establishment of the integrity authority, and the plan is for this body to start operating in the second half of November.

Another set of commitments includes the strengthening of the system of asset declarations, but the minister could not yet say whether the scope of the system would be extended to include family members of politicians, for example.

He declined to comment on the extent of the possible suspension of €3,000 billion forints, because "it will not happen".

"We did not make these commitments with the purpose of bedazzling the European Commission," he said.