Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The European Commission has approved a first payout of about €900mn in frozen funding to Hungary despite Budapest’s toughening rhetoric against Brussels.
Hungarian Prime Minister Viktor Orbán, who has long locked horns with the commission over billions of euros earmarked for his country, in recent days has threatened to block further EU aid for Ukraine until his country’s money is paid out.
In a similar move this week, Brussels approved an advance payment of €5.1bn to Poland, a first tranche of the money frozen over rule of law concerns in the country, as Donald Tusk prepares to return to office as premier.
Some €10bn under Hungary’s Covid-19 recovery programme, along with about €22bn in regular EU structural funds, have been frozen since December last year over concerns Budapest was not complying with human rights safeguards and undermining judicial independence.
On Thursday, the commission endorsed the €900mn pre-payment, which is not linked to reforms. The bulk of Budapest’s remaining funds is tied to 27 so-called super milestones that would ensure the EU’s rule of law and graft concerns have been met.
Hungary and Poland’s advance tranches come as EU countries are gearing up for difficult negotiations to top up the EU budget, including a €50bn financial support programme for Kyiv over the next four years to help cover its costs as it defends itself against Russian aggression.
Orbán has threatened to block the budget top-up, as well as EU weapons shipments to Ukraine and membership talks with Kyiv unless Hungary is paid what he says the country is due.
The Hungarian leader has also reinforced his illiberal policies with an anti-EU “public consultation” and with a draft law critics have said is mirroring Russia’s restrictions on foreign funding available for NGOs or politically active groups.
Orbán has repeatedly delayed sanctions against Russia for its war in Ukraine, saying that the EU was shooting itself in the foot and advocating for a rapid ceasefire that would consolidate Moscow’s territorial gains.
His actions have failed to reverse western policies and increasingly isolated the Hungarian leader, who has alarmed his allies with overtures to Russia and China, including a personal meeting with Vladimir Putin in Beijing last month.
Orbán has demanded that the EU unfreeze all of the funds it has withheld, including Covid-19 recovery funds, structural funds and the additional energy reform funds.
The commission said the decision to release the tranche was not political. “We are following the rules set out in the regulation,” said the commission.
The view in Brussels now is that Hungary has made tentative progress in certain areas regarding judicial independence when it adopted a set of reforms in June. As for the other funds, the commission said it was still awaiting clarifications on the required reforms.
Tibor Navracsics, Hungary’s minister responsible for the talks, said the release of the €900mn was the result of a breakthrough. “The talks have yielded a result: the first batch of European Union funds is on the way,” he posted on Facebook.
The pre-payment still needs to be approved by the other EU member states, which could do so at the next finance ministers’ meeting in December.
Read the full article here
