Commission VP says agreement on Hungarian "conditionality funding" baseless speculation

European Commission Vice-President Věra Jourová has categorically denied that the Commission has reached an agreement with the Hungarian government on the judicial reform (which is a precondition for releasing the biggest chunk of frozen EU funding) in exchange for Hungary accepting the reviewed EU budget, EUrologus has spotted.

Commission Vice-President asked about non-existent assertion

Citing Brussels sources, the Financial Times reported on Tuesday that the European Commission may accept the Hungarian rule of law reform by the end of November, which would give the Hungarian government access to up to €13 billion. According to two out of three sources quoted in the article, the body would do so partly in the expectation that Viktor Orbán's government would agree to an increase in the EU budget until 2027, which would also provide additional EU support for Ukraine. Politico later reported essentially the same, citing its own sources – including Budapest-based ones – and sources with insight into the negotiations also confirmed the news to Hungarian news site G7.

On Tuesday afternoon, the journalist of the Austrian Die Presse asked Commission Vice President Věra Jourová whether she would rule out a deal with Orbán where the "conditionality mechanism" would be scrapped in exchange for approval of the budget review.

This is quite different from what the Financial Times wrote. The journalist simply got lost in the complex system of conditionality, which is made up of partly interconnected and overlapping elements, although the answer suggests that the Commission Vice-President understood this part.

However, as previously reported, the Financial Times article did not mention any done deal,

only that the European Commission would be prepared to accept the judicial conditions as fulfilled, in part as a trade-off for the approval of the budget review, meaning that the body would unilaterally hope for this. Earlier in the day, Hungary's Minister for Regional Development Tibor Navracsics, who has had numerous meetings with Commission members on the frozen funds, claimed that he was not aware of any deal and had received no indication for anything similar from Brussels (as EUrologus notes, even if such a behind-the-scenes deal were to exist, one would not expect it to be officially confirmed).

“What you describe is baseless speculation.”

- the Commission Vice-President, who is responsible, among other things, for upholding fundamental values, replied to the Austrian journalist. She added that the two parties are engaged in a very intense dialogue on "conditionality", and said that a letter with further questions had been sent to Hungary on 15 September (this adds to the chaos, as a later date had been mentioned before). According to Jourová, they haven't received an answer yet, and once they do, they will have another month to make a decision.

“Your question referred to some sort of agreement. I can very simply say no, that's not true.”

What is this judicial reform and what is it blocking?

As part of the judicial package, the EU expects:

• the role and powers of the National Judicial Council (OBT) to be increased
• a strengthening of the independence of the judges of the curia – the former supreme court – to protect them from political interference;
• a removal of the possibility for the authorities to challenge final judgments before the Constitutional Court;
• a removal of obstacles which – as previously ruled by the Court of Justice of the European Union – may have resulted in Hungarian judges being restricted in their right to refer cases to the EU body if they perceive a conflict between Hungarian and EU law.

The reform is blocking almost all of the €22 billion in cohesion funding reserved for Hungary, but some of it cannot be paid out to the Hungarian budget due to other conditions, one of which is the conditionality procedure. The €13 billion referred to by the Financial Times is the part that would no longer be withheld for other rule of law reasons if the European Commission were to consider the judicial package complete.

In fact, it is quite likely that the amount is less than that, because certain technical conditions would also have to be met, but according to a July article in Szabad Európa, the government has only fulfilled a small number of these. At the time, it was estimated that only up to €6 billion could be freed up next year.

What has happened with the judicial reform so far?

It was in April that then Justice Minister Judit Varga announced that a "technical agreement" had been reached with the European Commission on what was intended to be the final version of the judicial conditions. Parliament then passed the legislation, which she said would complete the requirements.

Immediately afterwards, it was actually Věra Jourová who indicated that they were also interested in the practical implementation.

Then in mid-July, Varga wrote a letter to the European Commission stating that the government had fully implemented all its commitments laid out in the judicial milestones. At the time, head of the Prime Minister's Office, Gergely Gulyás said that the European Commission had three months to make its evaluation. According to leaked information, the EU body sent further questions to Hungary last week, thus "stopping the clock", but Gulyás Gergely said they were only stalling for time. On Tuesday, Tibor Navracsics confirmed that they are working on the answer, but haven’t yet sent it.