Brussels froze £11.5 billion in EU funding on Wednesday and ordered Budapest to make major reforms before it could receive the cash that is vital for its economy.
Viktor Orban, Hungary’s prime minister, is at war with Brussels over accusations he is eroding democratic standards, cracking down on gay rights and on freedom of the press.
It is the first time the European Commission has used a new mechanism to force governments into line by withholding billions from the EU coffers.
The Commission has put forward 27 “super-milestones” which must be fulfilled before any of the money is disbursed to a country which is heavily dependent on EU funding.
“No funds will flow until the essential milestones are properly implemented,” said EU Commission Vice-President Valdis Dombrovskis as Brussels insisted there would be no reward for partial completion of the reforms.
Funds intended to raise living standards
The commission on Wednesday froze £6.5 billion in EU cohesion funds, which are meant to raise living standards and flatten out inequality across the EU.
It has already put £5.8 billion of EU coronavirus recovery funds to reboot the economy after the pandemic on ice.
But in a classic Brussels paradox, it simultaneously approved Hungary’s application for the money, equivalent to 1.4 per cent increase in GDP by 2025, to maximise its leverage.
Budapest had already agreed to implement 17 anti-corruption measures in a bid to get the Covid funds. They are now part of the 27 milestones.
“Hungary will deliver on the remaining commitments as accurately and thoroughly as it has done so far,” said Tibor Navracsics, Hungary’s minister for Regional Development.
That tepid response masks the ire felt in Budapest towards the EU, however.
Prime Minister Viktor Orban’s chief political advisor, Balazs Orban, 36, no relation to his boss, told the Times newspaper this week, “the “woke” EU institutions [are] captured by “political jihadists” imposing a “progressivist” agenda on traditional and socially conservative countries such as Hungary.”
The restrictions on the EU funds will be put to a vote of all EU countries.
The vote will be held through a qualified majority where 55 per cent of the 27 EU countries, representing 65 per cent of the total population, have to approve the move.
That is significant because no single member state will be able to veto the move.
When the Commission has previously challenged Hungary, its ally Poland has been able to veto any punishment because it required the unanimous support of all 27 member states.
EU countries will make their decisions before December 19.
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