Hungary pledges to fix rule of law problems to secure EU funding

Hungary pledges to fix rule of law problems to secure EU funding
Viktor Orban's government has sent a letter responding to concerns aired by the European Commission. / bne IntelliNews
By bne IntelliNews August 24, 2022

Hungary's government has sent a letter responding to concerns aired by the European Commission in regards to rule of law, Justice Minister Judit Varga announced on August 23.

Viktor Orban's government, facing a dire financial strain in public finances, is also in intensive negotiations to secure funding from the EU's Recovery and Resilience Facility (RRF) and the Partnership Agreement for the 2021-2027 Cohesion Fund resources, which have yet to be cleared by Brussels.

"We put a comprehensive package of measures on the table to address all the Commission's concerns and we remain open to a constructive dialogue with the Commission", Varga said in a Facebook post.

In a weekly presser, Gergely Gulyas, the head of the Prime Minister's Office, said Hungary would amend some dozen laws by the end of October in order to make the public procurement system more transparent, cleaner and faster, if a compromised agreement is reached.

The government will establish a "stricter and most transparent" system for the use of EU funding and for oversight of procurements that must be advertised in the EU's tender system.

"We hope the conditionality procedure can be closed and then the agreement on the recovery funds and then also the seven-year budget can be signed," he added.

As reported by bne IntelliNews, the EC triggered the new conditionality mechanism against Hungary in April, which in effect suspended transfers of EU funding to Hungary. This move demonstrated that the EU is not planning to give way to Hungary's violation of EU values. 

A response the government sent to the EC at the end of June left some concerns unaddressed, an EC spokesperson said late in July, adding that the government had one month to submit remarks on the issues, which expired on August 23.

Hungary earlier promised to reduce the ratio of single-bid public procurements to under 15% and to reduce the use of expedited procedures in legislation, and steps will be taken to allow legal recourse regarding decisions by the prosecutor general in cases involving corruption.

Hungary’s chief negotiator, Minister for Regional Development Tibor Navracsics, told local media that he expects an agreement on the "conditionality mechanism" by September and on  the Partnership Programme  "in the early autumn". Negotiations on the recovery fund are much more politicised, he said, but the government strives to reach an agreement before the end of the year at the latest, he added.

The EU’s executive has been withholding its approval for disbursements to Budapest of €5.8bn in grants from the EU's special recovery fund over long-standing concerns over rule of law issues. Hungary has also requested €9bn in loans from the facility that aims to help member states' transition to a green economy.

Hungary is set to receive €22bn from the EU's seven-year budget, which could also be blocked by the ongoing rule of law case.

The compromise agreement depends on the European Commission, Navracsics said, who did not go into details of the content of Hungary’s reply to address the rule of law concerns of Brussels.
Hungary will amend some of the laws criticised by the European Commission, in the autumn, he confirmed.