Hungary risks cuts of EU funds in bloc’s 1st rule-of-law procedure

By Agnes Szucs

BRUSSELS (AA) - Hungary may face cuts in EU funds over rule-of-law breaches as the European Commission activated on Wednesday the so-called conditionality mechanism for the first time in the bloc’s history.

The college of EU Commissioners mandated budget chief Johannes Hahn to send an official letter to Hungary triggering the conditionality mechanism that ties EU funds to the respect of the rule of law, Margaritis Schinas, the European Commission’s vice-president announced at a news conference.

The process threatens member states with the suspension or complete cut of EU budgetary transfers if problems, such as corruption or state interference in judicial independence, directly threaten the EU’s financial interest.

An EU official speaking under the condition of anonymity said the European Commission has “serious concerns” about Hungary’s use of EU funds due to the assignment of EU-supported public contracts, problems with audits, and lack of investigations in corruption cases, as well as the state of the judicial independence.

Wednesday's decision opens the way for a procedure involving a constant conversation with Hungarian authorities that may take up to six to nine months.

If the European Commission finds serious breaches, it can propose a suspension or cut in EU funds that can only be executed if the majority of EU states approve it.

The Hungarian government has not yet commented on the announcement.

Previously, the minister in charge of the Prime Minister’s office, Gergely Gulyas, said the European Commission makes a mistake by “acting from the playbook” of the Hungarian opposition.

He also asked the EU executive body not to “punish” the Hungarian voters for supporting a law from last year which is officially meant to protect children from abuse but is claimed to discriminate against LGBTQ people by its critics.

EU officials have repeatedly asserted that the rule-of-law mechanism focuses on the EU budget and will not examine the legislation in question.

The regulation on the conditionality mechanism was approved in 2020 in parallel with the adoption of the 2021-2027 budget.

Hungary and Poland, who have been in a long-standing conflict with EU institutions over democratic backslidings, challenged the act at the EU Court.

In February, the court dismissed their lawsuit, claiming that “the sound financial management of the (European) Union budget and the financial interests of the (European) Union may be seriously compromised by breaches of the principles of the rule of law committed in a Member State.”