EU triggers budget fight with Hungary over rule of law

The European Union formally triggered its new rule-of-law budgetary powers against Hungary, kickstarting a process that could ultimately deny Prime Minister Viktor Orbán of more than €40 billion in EU funding.

European Commission President Ursula von der Leyen said last month that the time had come to use the so-called conditionality mechanism for reining in nations that violate the EU’s core values on Hungary, after failing to secure necessary changes from the government on issues, including corruption. 

The plan got the necessary approval from the commission on Wednesday, meaning a formal letter can be sent later in the day.

A ruling from the EU’s top court in February cleared the way for the commission to use its new powers over objections from Poland and Hungary, following years of increasingly bitter disputes with Warsaw and Budapest over the independence of courts, media freedom and LGBTQ rights. 

The EU put in place its new budget tool after growing weary of challenges to the independence of judges, an erosion of minority rights to the primacy of EU law - a key premise of the bloc’s founding treaty.

Poland and Hungary are the only two EU states subject to a so-called Article 7 procedure, which could lead to the suspension of their EU voting rights. That process is hampered by the need for unanimity among member states before such a punishment can be meted out.

The EU took an informal first step under its new powers last year, by sending letters to Poland and Hungary to address accusations that funds provided by the bloc could have been subjected to corruption or fraud, or that the EU’s financial interests are at risk. 

“We have carefully assessed” Hungary’s answers “and our conclusion is we have to move on the next step” and start the conditionality mechanism, von der Leyen said earlier this month.

©2022 Bloomberg L.P.

The Luxembourg Times has a new mobile app, download here! Get the Luxembourg Times delivered to your inbox twice a day. Sign up for your free newsletters here.