Hungary threatens to lose billions in EU grants, serious suspicions of EU financial fraud and corruption

If the Commission ultimately concludes that Prime Minister Orban’s government is actually harming the EU’s financial interests, it will propose a moratorium or suspension of support. It is the European Union that decides this. Hungary could rely on about 40 billion euros in EU subsidies in the coming years, and therefore it has a lot to lose.

The new rule of law test was introduced at the end of 2020 because current measures against fraud with EU funds are insufficient. For years some EU leaders, the European Parliament and citizens have bothered that Hungary and Poland play to the EU’s principles of democracy, but are at the same time major recipients of EU money. The European Court of Justice gave the go-ahead to test the new support in February of this year, by ignoring Warsaw and Budapest’s objections to it.

According to the officials involved, the message sent by the commission to Budapest on Wednesday is clear. It is a long list of “evidence and serious suspicion” about abuses with EU funds: nepotism in bids for EU-funded projects; poor control over the spending of EU funds; fraud and corruption; obstructing the prosecution of misuse of the EU budget; As well as the lack of anti-fraud policies. In the past 10 years, Hungary has had to repay more EU subsidies than any other EU country. “But that did not lead to any improvement,” a commission official said.

The new rule of law test is a harsher punishment than the current “financial corrections.” If the EU’s financial interests are damaged – or there is a good chance of that happening – the Commission could, in principle, suspend EU support across the board. How much money Hungary loses next depends on the extent of the abuse and for how long.

nine months

The Commission’s letter to the Orban government is the first step. Budapest now has two months to answer the doubts and take action. If this is not forthcoming, the committee will issue a second letter. If there is no satisfactory answer to this either, the Commission will make a proposal to stifle the flow of support.

The countries of the European Union take a decision on this by a qualified majority, so Poland and Hungary cannot prevent it. The entire procedure may take up to nine months.

Poland has not yet received a letter from the Commission. According to Brussels, this has nothing to do with the current political situation in which Poland receives the most Ukrainian refugees and is at the forefront of the resistance against Russian aggression in Ukraine. According to Commission officials, the misuse of EU funds in Poland is less clear than in Hungary, and therefore further investigations are required.

D66 MEP Sophie in ‘t Veld – one of the most vocal critics of undermining the rule of law in Hungary and Poland – is pleased that the Commission has initiated proceedings against Budapest. “Better late than never, but it is incomprehensible that Commission President von der Leyen acted so slowly.” In ‘t Veld notes that Orbán has just been overwhelmingly re-elected and “would feel under little pressure to change his authoritarian and kleptocratic course”.