Hungary threatens to block financial aid to Ukraine in row with EU on suspension of funding

Hungary threatens to block financial aid to Ukraine in row with EU on suspension of funding
Demonstration in Budapest, 2021

The Hungarian government announced on Tuesday that it intends to block a decision on approving €18 billion of financial assistance to Ukraine.

The announcement was made at a meeting with the EU’s economic and financial ministers. Following the announcement, a decision on the issue of a global minimum tax rate, which Hungary also has threatened to veto, was postponed.

While Hungary’s government has expressed a pro-Russian position and refused to join the EU Member States to provide military aid to Ukraine, it has supported the EU’s sanctions policy against Russia and its decisions on financial aid to Ukraine until now. Today’s announcement, therefore, comes as a blow to the EU’s solidarity with Ukraine.

A planned discussion on the Commission’s proposal last week to suspend EU funding to Hungary was reportedly also suspended. While approving Hungary's post-pandemic recovery plan, the Commission proposed to suspend any payments – totalling €5.8 billion – until the EU's requested rule of law reforms are implemented. An additional sum of €7.5 billion in regular cohesion funding was also blocked.

A Commission spokesperson explained at the daily press conference on Monday that it had carried out a detailed assessment of the measures proposed by the Hungarian government in response to the Rule of Law Conditionality Mechanism and saw no reason to update it.  It is now up to the Council to decide on the Commission’s proposal by 19 December.

The European Parliament declared already in November that the 17 remedial measures negotiated by the Commission and Hungary are “not sufficient to address the existing systemic risk to the EU’s financial interests”, even if implemented fully. Its resolution was adopted by 416 votes in favour,124 against and 33 abstentions

They called on EU Member States to trigger the conditionality mechanism in order to protect the EU budget against breaches of the principles of the rule of law in Hungary, and to lift it only after the Hungarian remedial measures have had a sustainable effect. “If these measures are reversed in the future, the Union should proceed to financial correction.”

As foreseeing today’s Hungarian veto, the MEPs called on the Commission and Council not to give in to the pressure Hungary is exerting on them by blocking crucial EU decisions, such as €18 billion in macro-financial aid to Ukraine and the global minimum corporate tax rate deal. The Council’s decision will be taken by qualified majority.

Convening in Copenhagen during last weekend, the European Greens published an open letter calling on the EU to stand firm on the rule of law. It repeated the Parliament’s view that the measures proposed by the Hungarian government will not go far enough to rectify the damage done to Hungarian democracy and the rule of law over more than a decade.

“These measures are inadequate to protect the financial interests of the Union. The level of political influence on the judiciary in Hungary means that we cannot trust that any new anti-corruption measures will be effective.”

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According to the letter, for too long EU funds have been syphoned off in Hungary and elsewhere to the benefit of those close to power. “However, the existing institutions and agencies in Hungary that are tasked with protecting the EU’s financial interests cannot be considered independent from the influence of the governing parties.”

The Greens also called on the Commission to find ways to distribute EU funds to local governments and NGOs if the Hungarian government does not cooperate around deficiencies in the rule of law. “Direct EU funding to local governments, businesses and civil society in Hungary should be pursued as a way of supporting Hungarian society outside of government-controlled structures.”

"From the minimum corporate tax rate to sanctions policy, (Hungary Prime-Minister) Orbán is trying to derail EU policies in an attempt at blackmail. This cannot and will not work. Other EU Member States must show unity in support for European values and the rule of law,” commented MEP Terry Reintke, Co-President of the Greens/EFA Group.

The Brussels Times

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