EU recommends withholding funds for Hungary over donation concerns

EU recommends withholding funds for Hungary over donation concerns

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The European Union’s executive arm has proposed suspending 7.5 billion euros ($7.5 billion) from its budget earmarked for Hungary over allegations of corruption and fraud.

The European Commission proposed the funding freeze as part of its new power under its so-called conditionality mechanism, according to a statement on Sunday. The sentence would still have to be approved by the bloc’s member states.

“The European Commission today proposed budget protection measures to the Council under the conditionality regulation,” according to a statement on Sunday. “This is to ensure the protection of the EU budget and the EU’s financial interests from violations of the rule of law in Hungary.”

Hungarian Prime Minister Viktor Orban challenged the EU’s democratic establishment after an unprecedented consolidation of power that saw him rewrite the constitution, overhaul electoral rules and expand his influence over the courts, media, culture and education. Under his leadership since 2010, Hungary has sunk in Transparency International’s Corruption Perceptions Index and now ranks lowest in the EU after Bulgaria.

Financial interest

Tired of moves to undermine the independence of judges, the erosion of minority rights and the supremacy of EU law, the bloc has put in place a new mechanism to protect its financial interests against members it accuses of democratic backsliding. Hungary is the first country to be targeted, although Poland, where the leadership has emulated Orban’s policies, may also be at risk of similar scrutiny in the future.

The EU standoff has hit Hungarian assets, with the forint down almost 10% against the euro this year. Investors said the uncertain outlook for EU funds was contributing to a disproportionate sell-off.

Last month he offered to set up an anti-graft agency and amend laws, including on public procurement, to assuage the concerns of the EU executive.

EU governments must make a final decision within a month on whether to cut Hungary’s funding, with the possibility of an extension of up to two months. A qualified majority of the Member States is required for the Commission’s proposal to enter into force.

Orbán wasted no time in sending his officials to persuade his counterparts to vote against the funding cuts.

“The Hungarian government is ready to provide guarantees to ensure that the Hungarian people receive the funds they are entitled to,” Justice Minister Judit Varga wrote on Facebook Thursday after meeting in Paris with Garance Pineau, an adviser to French President Emmanuel Macron on EU matters. .

EU lawmakers said this week that the bloc’s executive branch had let problems in Hungary fester for too long and a lack of decisive action had “contributed to the collapse of democracy” there.

“Letting violations of the rule of law go unchecked undermines democratic institutions and ultimately affects the human rights and lives of everyone in the country where these violations are committed,” the European Parliament said in its resolution.

(Updates with suspension amount in first paragraph.)

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