Hungary and the EU: What next after Orban’s blockade?

The day after, Prime Minister Viktor Orban’s office reiterated that the Hungarian blockade of EU aid to Ukraine had absolutely nothing to do with blackmail. “Hungary ready to provide bilateral financial support to Ukraine”; quotes a tweet from the head of government after the finance ministers’ meeting. “There is no veto and no blackmail”. The Prime Minister wants to convince the EU member states that joint debt is not the solution in this situation. “If we continue on the way down as a debt community, there is no going back,” Orban said.

Hungary refused several projects

In fact, according to critics, it is definitely blackmail if important EU projects are blocked just because a member state wants to push through its own concerns. And Hungary is pushing art to new heights: for months now, the government has been refusing to approve the global minimum tax, is holding up the ratification of NATO expansion to include Finland and Sweden, and is finally blocking the aid package for Ukraine.

Commission Vice-President Valdis Dombrovkis writes that he regrets the decision in the Council of Finance Ministers: “I saw with my own eyes how desperate the situation is. We have to make an initial payment next month so that Ukraine can survive the winter. There are no alternative – we will find a way”.

The reason for Hungary’s blockade is that the EU Commission has frozen 7.5 billion of the regular EU aid and an additional 5.8 billion from the Corona reconstruction fund. As justification, the EU cites serious deficiencies in the rule of law, as have been found in numerous ECJ judgments against the country for years. The Commission has therefore recently called for a series of reforms. Viktor Orban claims he implemented them too. Alone: ​​Brussels lacks the belief that they consider the Hungarian measures to be empty promises.

Demands included the restoration of an independent judiciary, changes in the public procurement process, an office against corruption and much more. However, journalists in Hungary are constantly observing new violations of EU rules:

“While Hungary is trying to sell the EU Commission new anti-corruption measures to free up EU funds, Orban’s son-in-law Istvan Tiborcz has just received 380,000 euros from EU funds. Tiborcz and his father have a total of 3.2 million for ‘rural development ‘ received,” criticized journalist Szabolcs Panyi on Twitter.

What can the EU do without Hungary’s consent?

The European Parliament has even denied Hungary the status of a democracy and is demanding that the financial sanctions be maintained. The budget spokesman for the Greens explains: “Unfortunately, we have reached a point where the EU Commission has to prepare alternatives for financing Ukraine. (…) In the short term, we could use the emergency aid reserve via the EU budget buy the EU time. Overall, however, the instruments in the budget are not well enough equipped. Alternatively, the member states could set up a common fund and pay grants from the national budgets”.

Financial decisions can only be made unanimously in the EU. And getting around it isn’t easy. In principle, the 26 other member states could agree among themselves to jointly lend the 18 billion for Ukraine. However, that would mean that everyone would have to assume the financial guarantee for their share. Some member countries say they no longer have the necessary air in their households. Others fear difficulties in national parliaments. Such a bond would also be more expensive than a solution within the EU framework and would take longer. Because there is time pressure, the European Investment Bank could step in with a bridging loan.

It would probably be easier to first use the emergency aid reserve from the EU budget for Ukraine, which could also be expanded beyond the normal budget framework through reallocations. In general, however, the EU is poorly prepared for such emergencies in its treaties, also because there are no punitive measures against member countries that do not play by the rules.

Looking for a compromise

Germany and France are said to be working behind the scenes for a compromise between the Commission and Hungary. A reassessment of the reform steps in Hungary could perhaps solve the blockade and lead to the release of the funds, she suggested. It is also feared that next week’s summit may not get a qualified majority to maintain sanctions against Hungary under the so-called rule of law mechanism. That would be a dramatic embarrassment and the end of the attempt to set limits for member countries.

The Netherlands belong to the group of hardliners. “The credibility of the EU is at stake,” said Finance Minister Sigrid Kaag in the event that aid to Ukraine could not flow. She calls Hungary’s behavior “more than regrettable” and also notes that the rule of law in the country has long since been dismantled too far. The Netherlands did not want to vote to release the funds for Budapest.

In a burning letter, human rights organizations led by the anti-corruption NGO Transparency International have now appealed to the EU Council of Ministers not to back down on Hungary. “Over the last decade, the Hungarian government has shackled the courts, undermined media freedoms, demonized and sometimes criminalized non-governmental groups, curtailed academic freedom, and violated the rights of migrants, women and LGBTQ citizens, all while stealing money got from the EU.”

The organizations call for Hungary to continue to be monitored and to ensure “that EU money is spent for the right purpose and that Hungarian citizens benefit instead of serving the interests of the elite and perpetuating violations of the law”. The conclusion is that the EU should no longer finance governments that constantly violate their rights. But both sides are running out of time: the EU has to organize the money for Ukraine within a few weeks. And Hungary threatens that part of the Corona funds will expire if they are not released by December 19th.