Still too many risks of “systemic irregularities” and “deficiencies” in the public procurement market, the persistence of the “lack of a global anti-corruption strategy”, and the absence of a framework that allows for “effective” investigations. For these reasons, the EU Council has decided to freeze 6.3 billion of EU funds destined for Hungary. It is the first time in the history of the European Union that the trap envisaged on the basis of the conditionalities on the mechanism for the rule of law has been triggered. Hungary pays the price for a Viktor Orban, who in any case brings home the approval of the national recovery plan, for a value of 5.8 billion euros in guarantees from the recovery fund.
The tug of war between Budapest and Brussels had been dragging on for months, in a negotiation that ended up being linked to other dossiers. The European Commission had postponed the approval of the Hungarian Pnrr until today, and at the same time threatened to freeze the cohesion funds, necessary for the development of the regions, for the same reasons: corruption and the risk of fraud to the detriment of the common budget. The Hungarian government has begun to put its foot down on other dossiers, especially those that require a unanimous vote in the Council.
To try to get out of the impasse, at the end of November the EU executive proposed the conditional approval of the Hungarian recovery plan. The pact was that the disbursement of resources would only take place in exchange for compliance with certain reforms. A move that did not please the European Parliament, which threatened an inter-institutional crisis if the College of Commissioners did not act. He took his time, and finally acted.
Coreper, the body that brings together the ambassadors of all 27 member states, has approved the request to freeze cohesion funds for Hungary, as requested by the Commission. Budapest will not have access to 6.3 billion euros, instead of 7.5 billion as initially suggested. The Orban government therefore takes home 1.2 billion. A result that can be spent at the domestic level as a negotiating victory, especially as the guarantees of 5.8 billion euros are guaranteed for the post-pandemic recovery plan.
The agreement serves the Commission to avoid confrontation with the Parliament, and the Council to show that the point is being taken on compliance with the rules and correct use of Community funds. Not only. Hungary removes the veto that made it impossible to proceed with the approval of the new rules for a minimum tax for large companies. Now it will be possible to proceed with the minimum taxation of 15% for all those subjects with an annual turnover exceeding 750 million euros, who have their parent company or subsidiary in the territory of the European Union.
The ambassadors of the Member States agree with the Commission, which had in any case been asked for a further assessment: the corrective measures implemented so far by Hungary have “significant shortcomings”, as they “do not adequately address the identified violations of the rule of law and risks they entail for the Union budget’. The partners in Budapest have avoided confrontation with the country by acknowledging the commitment and the reduction of the amount of frozen resources, but above all by including the clause whereby the Council will be able to decide for the lifting of the freeze, and therefore the release, within two years, provided that the situation is completely resolved.