Europe Brussels unlocks 10 billion euros in frozen funds to Hungary

It is not all the money he is asking for, it is not clear that it is enough for Viktor Orban to give in, partially or totally, but it is clear that it is a more than important first step

Europe Brussels unlocks 10 billion euros in frozen funds to Hungary

It is not all the money he is asking for, it is not clear that it is enough for Viktor Orban to give in, partially or totally, but it is clear that it is a more than important first step. The European Commission announced this Wednesday that it is unlocking 10.2 billion euros in European funds awarded to Hungary that had been blocked for months. The decision, explains Ursula von der Leyen's team, comes because the Magyar Government would have completed the required reforms, the last of them on Tuesday night in its Parliament. But no one is aware that the announcement is made on the same day that the prime minister will travel to Brussels for a European summit that is marked, precisely, by the total veto of the start of Ukraine's accession negotiations and the review of the Budget. community that includes a mechanism to finance up to 50 billion euros between loans and transfers to kyiv over the coming years.

On 22 December 2022, the Commission found that Hungary did not comply with what is known as the horizontal enabling condition of the EU Charter of Fundamental Rights due to several concerns, including judicial independence. Following a "thorough assessment" and several exchanges with the Hungarian Government, the Commission now believes that Budapest has completed the pending judicial measures. "This means that part of the financing of the cohesion policy would no longer be blocked and, therefore, Hungary could begin to claim reimbursements of up to around 10.2 billion euros," says the statement made public this Tuesday afternoon.

"Member States should ensure the fulfillment of enabling conditions throughout the Cohesion Policy period. The Commission will closely and continuously monitor, in particular through audits, active engagement with stakeholders and monitoring committees, the implementation of the measures adopted by Hungary. If, at any time, the Commission considers that this horizontal enabling condition is no longer met, it may decide again to block the financing," the text warns.

From Brussels, conscious of the image, they give one of lime and sand. The specific requirements for that item, a third of the total frozen, are considered satisfied, but the rest, 21,000 million, are not. This part is also special, because it depends entirely on the Commission and should not go through the Council, through the Governments, as happens with Next Generation disbursements, for example.

Also a year ago, and to protect the Union budget "from violations of the principles of the rule of law in Hungary within the framework of the budgetary conditionality mechanism", the Commission stopped any disbursement, arguing that there were no guarantees or compliance in relation "with the principles of the rule of law in Hungary in the areas of public procurement, judicial actions, conflicts of interest, anti-corruption and public interest trusts."

Despite the exchanges since then, the Commission believes that "the violations of the principles of the rule of law" that led to the adoption of measures have not been resolved, so three cohesion policy programs, with a budget of 6.3 billion euros remain suspended and Hungary still does not have access to those funds. And the same goes for the Country Recovery Plan, in which they committed to 27 "super milestones" to ensure the protection of the Union's financial interests and strengthen judicial independence. These "super milestones" remain unchanged in Hungary's revised plan, approved by the Council on 15 December 2023. There is some progress, which has to do with the horizontal enabling conditions cited above, but, since the main ones do not have been fully fulfilled, at the moment no payment request can be made. So the total blocked for the moment remains at 21,000 million.

The European Parliament and the Hungarian opposition believe that it is an inadmissible, shameful transfer, and that it only fuels the destructive strategy of the dean of community leaders. The other 26 and the institutions are divided between those who believe that this time Orban's pulse is different, that not only is he serious but that his reasons (the "national interest") are irreconcilable and those who believe that no, that it is not a suicidal conduit, who is too intelligent and skilled and always has a plan. Among the first is the president of the European Council, Charles Michel. Among the latter, the president of the Commission, for example.

That this is blackmail is no secret. Orban's political director, Balasz Orban, told Bloomberg this week: those potential 31.2 billion euros, between Next Generation, Cohesion, Regional, etc. They demand them. They do not even ensure that this is enough to remove the veto from Ukraine, but what is clear is that to start considering it, the cash flow has to start arriving. And with that they would think of themselves as "a contribution" to that essential fund to meet the needs of kyiv.

In his meetings with leaders at the highest level, the self-proclaimed illiberal leader denounces that his country has made many of the required reforms and that Brussels still keeps those funds frozen. Which have to do with the legal system and the courts, but also with anti-corruption measures, or the lack thereof. The separation of powers, audit mechanisms for community money, the rights of the LGBT community or those of refugees.

Unlocking those 10 billion, a third of the total, is an offering to try to overcome the main obstacle for the European Council that this Thursday and Friday must decide the future of Ukraine, Moldova and the Community Budget. But Orban is not the only problem.

In recent weeks, several voices have appeared that in one way or another are altering the board. The vast majority of community and diplomatic sources repeat these days that there are 26 countries on one side and only one on the other, but scratching the surface we see that the reality is somewhat more complex. Hungary is the only one that talks about threatened "national interests", the only one that threatens in public, that accuses Ukraine of being "the most corrupt country in the world" or that denounces persecution of the Magyar minority. But several more rulers have been drawn into the heat of this dark light.

Italy, Austria, Slovenia or Slovakia have begun to show doubts, to link issues, to ask for compensation, to draw lines. Some do it, as is happening in Vienna, because they say they cannot accept favorable treatment for Ukraine when there are others on the waiting list, like Bosnia, whom they want to support. Others, like Slovakia, because it is the best way to send an (energetic) nod to the Kremlin without saying it openly. In the case of Italy, diplomatic sources report, the tone has been raised in recent hours. "Italy says it wants a balanced approach, and that there cannot be a decision on Ukraine without another on Bosnia. And they say there will be no additional money for Ukraine until issues relevant to Italy are addressed in the Budget negotiations. And they have mentioned many issues," says that clearly upset source.

Some neighbors do not like these "last minute doubts" and believe that it is inelegant, dangerous and disrespectful to mix the 50 billion for the survival of Ukraine with the troubled nations. And that it is absurd to ask for Bosnia, which, they argue, has not done what it should have and had promised. Not even when it was laxly approved to give it the status of candidate country. Repeating that strategy again, they reiterate, would not make sense.

All of this makes this week's Summit, the last of the year, even more convoluted. The veto at the start of accession negotiations cannot be circumvented. Perhaps Moldova's could be approved and kyiv continues waiting. One or both could be postponed to January or February, when kyiv has completed all pending requests. Or it can become stagnant.

But what the EU wants a solution for is the 50 billion mechanism, of which 17,000 would be in transfers and 33,000 in loans. If Hungary refuses, alternatives will be sought, either using the financial instrument that has already been used, the MFA (although the Community Budget is more comfortable, easier and safer) or special vehicles, a more exceptional resource but which would allow us to go to 26.

The entire package remains to be outlined, and the renewal of the Budget in general (the Commission requested 66,000 million additional contributions and the latest negotiation funds had already lowered it to 25,000, including that of Ukraine), but sources in Brussels are more optimistic . They anticipate a long and hard negotiation, but they say that in the end these types of discussions end up being resolved. And if in 2020 they agreed for one trillion euros, now that the doubt is around a few billion euros it cannot be impossible.