European Commission and Hungary deny report of deal with Hungary over EU funds

European Commission and Hungary deny report of deal with Hungary over EU funds
Regional Development Minister Tibor Navracsics and European Commission VP Vera Jourova in Brussels in 2022. / bne IntelliNews
By Tamas Csonka in Budapest October 4, 2023

The European Commission (EC) has rejected press reports that an agreement is in the pipeline with Hungary over unlocking frozen EU funds in order to win Budapest's approval for the increase of the EU budget to aid Ukraine. The Hungarian minister in charge of the talks said he learned from the press about the alleged conditions over the disbursements.

The Financial Times reported on October 3 that the EC intended to unfreeze about €13bn of funding for Hungary before the end of November, citing officials briefed on the discussions. The condition was that Hungary agreed to the increase of the EU budget and to support Ukraine's EU bid, which requires a unanimous vote.

European Commission VP Vera Jourova categorically denied the report at a press conference in Strasbourg on Tuesday, saying it is baseless speculation.

Hungary is eligible for €22bn in financing from the EU between 2021-2027 and €5.8bn in Recovery and Resilience Facility (RRF) grants. In addition,  at the end of August the government submitted an application for the credit leg of the RRF, in the amount of some €3.9bn.

The EU has blocked €6.3bn from Cohesion Funds to Budapest because of concerns over rule of law issues, corruption, and the lack of judiciary reforms.

Additionally, some €2.5bn of cohesion funds are blocked due to treatment of refugees, discrimination against the LGBT community, and violations of academic freedom, Budapest-based site on EU issues Eurologus writes.

This leaves approximately €13bn available, for which the government has committed to meeting super milestones, which include judicial reforms.

The government claims it has adhered to the EU criteria and sent the relevant documents to Brussels in mid-July. The Commission has three months to evaluate Hungary’s progress, and if it is positively assessed, an additional two months is needed to settle the invoices.

EC spokesperson Stefan de Keersmaecker told Eurologus that further clarifications are needed to assess whether the horizontal conditionality of judicial independence is met. The EC submitted questions to the government last week and once Hungary responds to these, the Commission will continue the assessment, he added.

Keersmaecker’s comments suggest that it is unlikely that Hungary could receive EU funds before the end of the year.

Regional Development Minister Tibor Navracsics, a former EU commissioner and a moderate Fidesz politician, hastily convened a press conference after the Financial Times story broke.

Addressing the suggestion in the press reports that the disbursement of Hungary's EU funding could be tied to the country's support for an increase in the EU budget and financial assistance for Ukraine, Mr Navracsics said the government hadn't been notified on the matter and didn't believe the two issues could be connected, although he acknowledged that talks on both topics could take place in parallel.

It had become "tradition" for the government to learn of the EC's position from the press, adding that the government had not received any official communication on the matter, he said.

The minister said Hungary could still reach an agreement that would clear the way for access to the country's European Union funding by the end of the year.