Former diplomat and current head of the European Studies institution at MCC Rodrigo Ballester recently gave a lecture on the series of legal proceedings against Hungary by the EU. While the specifics of the closed-door negotiations remain unknown, the end of the funding of the Erasmus programme marks another red line that has been crossed, leading Ballester to label the process as vendetta and blackmail, rather than a rule of law procedure.

The origins of this story can be traced back to the onset of the Covid pandemic, when EU economies were in dire straits. In response, the EU made the decision to borrow collectively, as individual member states were so heavily indebted that they could have only borrowed on poor terms. Countries such as Italy, France, Spain, and Greece have public debts that range from 75 per cent to 130 per cent of their GDP, respectively.

The collective borrowing, known as the ‘Next Generation EU fund’, was designed to provide member states with much-needed support in the form of grants and loans. According to Rodrigo Ballester, the recent decision to end Erasmus funding marks a significant step towards federalisation, akin to a ‘Hamiltonian moment’, referring to the first US Secretary of Treasury, Alexandar Hamilton, convincing the federal government to assume the individual states’ debt in 1790. Collective borrowing and debt management also assume common obligations, bringing the member states of the EU closer together.

However, this process has been marred by the imposition of rule of law conditionality on the allocation of funds. Ballester notes that the definition of the rule of law is a complex issue that could be debated for hours without resolution. For the EU, the rule of law is defined by the independence of the judiciary. While this condition was intended to protect the budget, it has been criticised for being arbitrary and undermining legal certainty.

Hungary is currently the only country undergoing such a procedure. While Poland has not received any funds either, it is also not under investigation. The procedure was announced just two days after Fidesz won the last parliamentary elections, leading Ballester to suggest that more careful timing and communication could have avoided the perception that Hungarians had voted for the wrong candidate. While it is reasonable to expect that taxpayer money would not finance corruption, Ballester argues that the current mechanism is flawed and can lead to infringements in the name of the rule of law.

The current situation surrounding Hungary and Poland’s access to EU funds is somewhat unusual, as both countries could potentially have to repay the loan without ever receiving any aid.

Hungary is currently unable to access certain general funds, which raises not only concerns about the rule of law but also about European values. While the law on child protection is not within the EU’s competencies,

EU lawyers have made it clear that the allocation of funds must be in line with EU documents that call for the respect of modern gender theory.

Ballester suggests that this illustrates how the devil is in the details of the contracts, with money now being withheld based on a detail that has nothing to do with the resources.

Looking to the future, Ballester warns that we should expect even stronger pressure on gender issues. This case underscores the importance of paying close attention to the fine print of EU contracts, as seemingly minor details can have significant impacts on the allocation of funds.

What Is the Law on Child Protection Currently Under Attack?

In a 2021 resolution, the Hungarian parliament accepted the following amendment to Act XXXI of 1997 on the Protection of Children and the Administration of Guardianship:

‘Article 1 (1) The following Article 3/A shall be added to the chapter “Purpose and Principles of the Act” of Act XXXI of 1997 on the Protection of Children and Guardianship Administration (hereinafter referred to as the “Act”): Article 3/A In the child protection system, the State shall protect the right of children to self-identify according to their sex at birth.’