Breakthrough in the months-long rule of law dispute with Hungary: The European Union is withdrawing 6.3 billion euros in funding from the country governed by Prime Minister Viktor Orban, as the member states decided in Brussels. The German Minister of State for Europe, Anna Lührmann (Greens), welcomed the basic agreement on Tuesday as a “historic signal”. It shows that “values such as the rule of law are non-negotiable”. At the same time, Hungary gave up its veto on EU aid of 18 billion euros for Ukraine.
MEP Daniel Freund (Greens) also described the decision as “historic”. “Autocrats in the EU are now being cut from EU funds,” he stressed. “Viktor Orban’s blackmail attempts were unsuccessful. He is now getting the receipt from Brussels for his systematic dismantling of democracy.”
The funding cut for Hungary is 1.2 billion euros lower than proposed by the EU Commission. She had recommended that the member states block EUR 7.5 billion in funding due to corruption and other problems in Hungary. In addition, Brussels is holding back a further 5.8 billion euros for Budapest from the Corona development fund. In total, more than twelve billion euros remain blocked for Hungary for the time being.
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According to diplomats, the EU countries approved the reconstruction plan for Hungary in principle. However, the payment of the 5.8 billion euros is linked to a series of progress in the rule of law.
Hungarian Justice Minister Judit Varga said in Brussels that she was “happy” with the compromise. This is a “success for the entire European Union” and not just for her country, she stressed. Varga was convinced that Hungary can quickly release the 5.8 billion euros from the Corona recovery fund through rule of law reforms.
The Czech Republic, which will preside over the EU member states until the end of the year, spoke of a “mega deal”. Because now a further 18 billion euros in EU financial aid for Ukraine can flow from January.
In addition, Budapest gave up its opposition to a minimum tax for international corporations of 15 percent. Federal Finance Minister Christian Lindner (FDP) welcomed this on Twitter. In this way, the EU achieves “fairness with those who rely on tax dumping in the competition between locations”. However, according to diplomats, Poland is now raising new reservations about the minimum tax.
Hungary had previously blocked the necessary unanimous decision on aid to Ukraine and the minimum tax with its veto. Other EU countries have therefore accused Viktor Orban’s government of “blackmail”. The agreement reached during the night still has to be confirmed by the governments in the written procedure. This is expected before the EU summit on Thursday in Brussels.
At the meeting of the heads of state and government of the EU states, one of the topics is further support for Kiev. In his official letter of invitation, EU Council President Charles Michel called on the member states to make sustainable decisions. It’s not just “about the immediate needs of the country,” emphasized Michel. Rather, military and financial aid for Ukraine must be guaranteed for several years.
A reconstruction conference will be held in Paris this Tuesday, in which Germany’s Foreign Minister Annalena Baerbock (Greens) will be taking part. On Monday, on the sidelines of the External Council in Brussels, she described the rule of law as the “backbone of the European Union”.
According to Lührmann, Germany supported until recently the cut of 7.5 billion euros recommended by Brussels for Hungary. According to diplomats, Eastern European countries in particular feared a domino effect, since the EU Commission also complained about deficiencies in the rule of law.
Lührmann therefore called the decision “a signal to other EU member states that we are prepared to use these procedures if necessary”. The EU Commission initiated the so-called rule of law proceedings against Hungary after Orban’s re-election in April, thereby setting a precedent.
MEP Eva Kaili, who has been arrested on corruption charges, has been dismissed as Vice-President of the European Parliament. Parliament President Roberta Metsola revoked the 44-year-old “with immediate effect from all powers, duties and tasks” as her deputy.
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