The European Commission decided to unfreeze around €10.2bn in cohesion funds for Hungary as it had met the required criteria for judicial reforms, it was announced in the evening hours of December 13.

The remaining €11.7bn remains locked until Hungary meets conditions on fighting corruption, asylum seekers, its anti-LGBT+ lawand concerns over academic freedom.

Last month, the European Commission approved the country's RRF plan, paving the way for the release of the first €0.9bn tranche, though the remaining €9.5bn are frozen until it meets 27 "supermilestones" on restoring the rule of law and curbing corruption.

EU Justice Commissioner Didier Reynders said that judicial reforms carried out by the Hungarian government were in "full compliance with the requirements" set by the EU.

On Wednesday afternoon, the decree was published in the official gazette, which removed obstacles to courts to refer a request for a preliminary ruling to the ECJ.  Earlier, a disciplinary proceeding was also initiated against the Hungarian judge for turning to the CJEU, although it was dropped subsequently.

The €10.2bn in question equals three years of funding for Hungary from cohesion funds, which will be paid out gradually on the basis of invoices submitted and accepted by the Commission. In the new budget cycle, Hungary has already requested funding of €500mn for investments prefinanced by the state budget.

The first payments for these could be made by the end of February at the latest, as the Commission has 60 days to check the invoices, Portfolio writes.

By meeting the four milestones guaranteeing judicial independence, Hungary fulfilled the so-called horizontal eligibility criteria, thus removing the obstacle to paying Hungary any money from the seven-year budget, Eurlogus observed.

Three cohesion programmes with a budget of €6.3bn remain suspended under the current conditionality mechanism due to breaches of the rule of law, and the same applies to €10.4bn of RRF funds. This will not be accessible until Hungary meets all 27 criteria or super milestones.

The EC said that despite Hungary’s progress on judicial independence, the body maintains its concerns regarding other areas covered by the horizontal enabling condition on the EU Charter of Fundamental Rights.

"These concerns relate to Hungary’s so-called child-protection law, serious risks to academic freedom and the right to asylum. Until these concerns are addressed, the horizontal enabling condition remains unfulfilled, and the Commission cannot reimburse the related expenditure under several programmes," it added.  This roughly equals €2.6bn in funding.

Before the EC announcement, leaders of largest factions in the European Parliament called on the Commission not to unfreeze funding to Hungary until the country completely resolves its rule-of-law problems.

The letter, obtained by Politico, was signed by the heads of the European People’s Party, the Socialists and Democrats, Renew Europe and the Greens.

German Green MEP, Daniel Freund, a long-time critic of the prime minister, sharply criticised the decision on social media. He said Ursula von der Leyen is now paying the biggest bribe in the history of the EU to autocrat and Putin friend Viktor Orban.

The launch of accession talks will be put on the agenda at the summit, local media writes, but it remains to be seen whether the release of the funds will have an impact on Orban’s earlier announcement to veto decisions on Ukraine.

Hungary’s prime minister sent a message to EU leaders deemed as clear ransom by some two days ahead of the key summit demanding the release of all funds to Hungary for his support to approve €50bn in funding for Ukraine from the MFF, long-term budget of the EU.

Starting accession talks is considered a highly symbolic step, which does not guarantee membership, and is followed by very detailed negotiations that can last decades. Yet Budapest, for political and economic reasons, remains stubbornly opposed to the idea.

During a debate in the Hungarian parliament on Wednesday, Orban warned that fast-tracking Ukraine's European Union accession would come with unforeseen consequences. He called the start of accession talks "absurd" and "frivolous" and Ukraine had only fulfilled four conditions of the seven set by the EU candidate status.

He said Ukraine's accession would come with many unknowns, such as the area of the country's territory and the size of its population. Support for Ukraine as a member state would come to 17% of the EU's current budget, he added.

The European Commission had granted Ukraine candidate status if it fulfilled seven conditions retroactively, but it had met just four of those, he asserted.

In an interview with pro-government Mandiner, Orban said beginning talks with Ukraine on EU membership is a grave mistake, one that is "destroying the European Union."

News on the unlocking of vital EU funds for Hungary, along with the FED rate decision, bolstered the forint, which was trading at 378 versus the euro on Thursday morning, a 1% gain from the previous day.