The European Commission is considering the release of the billions of Euros of EU funds that have been withheld due to concerns related to alleged rule of law violations, the Financial Times has reported. According to the FT, the potential unlocking of the funds would be a means to gain Hungary’s support for an increase in the EU budget and provide substantial financial assistance to Ukraine.
Tying the release of the funding, which has been inaccessible since last December, to Hungarian approval of EU budget-related decisions is something Prime Minister Viktor Orbán is unlikely to budge on.
Orbán has firmly stated that Hungary will not approve any EU budget increase until its access to the withheld funds is reinstated.
The European Commission aims to unfreeze approximately €13 billion in funding before the end of November, according to three officials familiar with the matter who spoke to the Financial Times. Two of these officials indicated that the decision to disburse the funds is partly motivated by the desire to secure Orbán’s backing for the budget increase.
In December of the previous year, the EU suspended €22 billion in cohesion funds designated for Hungary after determining that the country was not complying with regulations safeguarding human rights and the rule of law. Cohesion funds are intended to assist less economically developed member states in narrowing the investment gap and enhancing their infrastructure. Hungary responded to Brussels’ demands by implementing judicial reforms in May, which, if deemed satisfactory by the European Commission, could pave the way for unlocking more than half of the frozen funds, totalling €13 billion, as explained by the officials who requested anonymity.
Stefan de Keersmaecker, a spokesperson for the European Commission, revealed that Brussels had reached out to the Hungarian government on 26 September, seeking clarifications on certain aspects of the reforms. He added that once Hungary provides responses to these inquiries, the Commission will proceed with its assessment.
This apparent development regarding Hungary’s access to the frozen funds aligns with Brussels’ efforts to secure unanimous support for the increased EU budget before the year’s end, particularly to ensure ongoing financial aid to Ukraine.
The urgency of this matter is underscored by the recent decision of the US Congress to redirect $6 billion in aid for Ukraine to facilitate a new government funding bill. The European Commission has proposed a €66 billion increase in the EU’s shared budget to cover rising expenses, a portion of which would contribute to a €50 billion financial support programme for Ukraine to address its financial needs over the next four years.
Several EU member states have expressed reservations about the magnitude of the proposed budget increase.
Approval for this budget boost requires unanimous support from all 27 member states, necessitating additional contributions from their national budgets. It is important to note that any decision to unblock payments to Hungary may face criticism from the European Parliament, which has consistently called for a tough stance against Orbán’s government. While the EP lacks formal authority to block payments to member states, it can potentially delay an agreement on the EU’s budget increase.
Sources: Hungarian Conservative/Financial Times