The European Commission proposes to cut 7.5 billion euros from Hungary’s European funding until 2027 due to corruption and rule-breaking.

The European Commission on Sunday proposed to the Council of the European Union (made up of representatives of member states) to cut 65% of Hungary’s European funding for the largest operational projects within the cohesion policy, according to a press release from the European administration.

European Commissioner Johannes Hahn said it would cut 7.5 billion euros, according to Deutsche Welle.

As well as suspending funding, the European Commission proposed to ban any money from the EU budget going to public welfare foundations controlled by close allies of Prime Minister Viktor Orbán.

The European Commission declared that Budapest has made some legislative and administrative proposals in the proper sense, which “could solve the problems in the policy, if they are properly described in the relevant laws and regulations and if they are properly implemented”.

However, the commission points out that “at this point, the budget is still considered at risk, pending the fulfillment of key implementation milestones.” It explains today’s decision and proposed measures, which also take into account the remedial measures offered by Hungary.”

The EU Council has one month to accept or reject the Commission’s proposal. A Council decision does not require unanimity, but a qualified majority. Hungary needed it to prevent the final result Suppression of minorities. A blocking minority must consist of at least four Council members representing more than 35% of the EU population.

However, at this time, no other member state has taken a position on Hungary’s side. Also: Viktor Orban’s government has also been isolated from its traditional Visegrad partners (Poland, Slovakia, the Czech Republic and Slovenia) after Budapest aligned itself with Russia in the Ukraine conflict.

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The European Commission has proposed to freeze the funds payable to Hungary for the period 2021-2027, making it conditional on EU funds complying with the law, in order to protect the EU’s financial interests.

Report of the Commission:

The European Commission today proposed budgetary protection measures to the Council under the cross-compliance regulation. These measures aim to ensure the protection of the EU budget and the EU’s financial interests against legal violations in Hungary.

Commenting on today’s decision, Commissioner for Budget and Management Johannes Hahn said: “Today’s decision is a clear demonstration of the Commission’s commitment to protecting the EU budget and using all the tools at our disposal to achieve this important objective.”

The move builds on an intensive dialogue between the Commission and Hungarian authorities in recent months, which resulted in Hungary proposing a series of remedial measures to address concerns identified by the Commission when the process was formally launched on April 27 this year.

This follows a letter from the Commission to Hungary, further clarifying the measures it intends to propose to the Council and the restructuring measures provided by Hungary in a letter of 22 August and a letter of 13 September.

The Commission has thoroughly assessed Hungary’s response, in particular whether the remedial measures adequately address the Commission’s initial findings. For the measures to be considered appropriate, they must put an end to the infringements of the law and/or the risks they create for the EU budget and the financial interests of the Union.

The Commission’s conclusion is that the proposed remedies, if properly described in the relevant laws and regulations and properly implemented, can, in principle, resolve the issues at hand.

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At this point, the Commission considers that the budget is still at risk, pending the completion of major enforcement actions. It explains today’s decision and proposed measures, which also take into account the remedial measures offered by Hungary.

At this stage, the Commission proposes the following measures:

  • Suspension of 65% responsibilities for the three operational programs under the principle of synchronization.
  • Prohibition of entering into statutory liabilities with public welfare trusts for schemes executed under direct and indirect management

The Council now has one month to decide whether to take these measures with a qualified majority. In exceptional circumstances this period can be extended by a maximum of two months.

In the meantime, the Commission will monitor the situation and inform the Council of any relevant elements that may influence its ongoing assessment. Hungary committed to fully inform the Commission on the completion of key implementation milestones by November 19.

environment. The regulation on the common cross-compliance regime for the protection of the Union budget ensures the protection of the EU budget in cases where violations of the provisions of the law seriously affect or endanger its sound financial management or the protection of the EU’s financial interests. A fairly straightforward method. It will be applicable from January 2021 onwards. Since then, the Commission has been monitoring the situation in all EU countries and collecting relevant information.

On 2 March 2022, the European Commission adopted its guidelines on a common cross-compatibility regime. The guidelines explain in detail how the Commission will apply the regulation, including how the rights of final recipients and beneficiaries of EU funds will be protected.

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The procedure in Hungary is the first procedure under the regulation. The Commission continues to monitor information from all relevant sources to identify possible relevant violations of the rule of law.

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