"The President of the European Commission, Ursula von der Leyen, has openly stated why Hungary is not receiving the funds it is rightfully entitled to", says Stefi Déri, one of the faces of pro-government propaganda outlet, Megafon, in a video posted in January. As evidence, she quotes from a speech made by the President of the European Commission to the European Parliament on 17 January. Von der Leyen says in the extract:
"Around €20 billion in EU funding remains frozen for Hungary, due to concerns about LGBTQI rights and the rights of asylum seekers, among other things."
According to the influencer, this is a true confession, "we can forget about the rule of law issues and Brussels’ previous fabrications", and "We could have suspected that there were other reasons behind the pressure from Brussels".
At the end of January, other faces of Megafon such as “A kopasz oszt” (“The Bald One quips”) and Szilveszter Szarvas posted similar videos, but they did not let the issue go during the pardon scandal of the President and the former Minister of Justice in early February. In February, the social media mouthpiece of the governing party spent tens of millions of forints to discredit the opposition: in their advertised videos they suggest that child protection is not important for the opposition, but Von der Leyen's alleged admission was also mentioned in several videos (for example, Dániel Bohár and Kristóf Trombitás).
Megafon spent a total of HUF 10-11 million HUF (25-28k €) on Facebook for the videos based on the "Von der Leyen confession" narrative until 22 February 2024.
However, there are several problems with this message.
While Von der Leyen did indeed speak to the European Parliament on 17 January about the reasons for freezing the funds for Hungary, in the original speech she talks about three areas: the rights of LGBTQI people and asylum seekers, as well as concerns about academic and scientific freedom – the latter of which simply disappeared from all the Megafon videos. The full speech about the issues with Hungary starts at 6:13:
I am proud that our Union has answered Ukraine’s call.
— Ursula von der Leyen (@vonderleyen) January 17, 2024
Ukraine’s democratic institutions are delivering on our recommendations and on the aspirations of their people.
We will now start the screening process ↓ pic.twitter.com/GQHjaASZHq
On the other hand, contrary to Megafon’s claims, the European Commission
has made no secret of the fact that they do not see the fundamental rights of LGBTQI people and refugees being enforced in Hungary and that this is one of the reasons why they cannot give Hungary some of the EU funds it is entitled to.
This information was first made public - by the Hungarian government and by the press - when in December 2022 the EU approved Hungary's plans to spend the two EU funds in question: the cohesion and home affairs funds of the 2021-2027 Multiannual Financial Framework (MFF) and recovery funds of the Recovery and Resilience Facility (RRF). However, the EU made the disbursement of these funds conditional.
These conditions, moreover, cover many more problematic areas than those mentioned in the Megafon videos - not just the LGBTQI rights and the rights of asylum seekers.
In this article, we show exactly what kind of freezing of funds is at stake and what conditions the EU is imposing to unfreeze them with the help of official European Commission decisions and Q&A articles, as well as data visualization analysis entitled "Missed opportunities" by the Hungarian Helsinki Committee and the Átló team.
When we talk about frozen EU funds "rightfully due to Hungary", we are talking about two types of funds.
This means a total of €31.7 billion in blocked development aid for Hungary. Of this, just over €10 billion has already been released, but €21.8 billion, or around €8,300 billion, is still being withheld by the European Union.
The EU blocks the different funds by different means, under different laws, and the conditions for accessing each fund vary. However, they are interlinked in several ways - which we will break down below.
Let's start with the cohesion funds because they account for the bulk of the blocked funds, and because this is where the fundamental rights issues raised in the Von der Leyen speech come up.
There are two ways in which the EU is blocking cohesion funds:
For Hungary, the Commission has identified a total of 4 fundamental rights issues and 11 policy deficiencies linked to different operational programs, and within them to different objectives, blocking the EU funds allocated to them. And under the rule of law conditionality regulation, the Hungarian government has made 17 commitments, mainly concerning anti-corruption measures.
Let's first look at the fundamental rights issues, which are at the center of the debate between the European Commission and the Hungarian government due to their political sensitivity, but which, as we will see below, are blocking only a relatively small part of EU funds.
1. The independence of the judiciary
The European Commission has found that domestic courts fail to guarantee the fundamental right to an effective remedy and a fair trial. Without independent courts, the proper application of EU law, including compliance with the Charter, cannot be guaranteed.
This was the fundamental rights problem that made all but one of the cohesion funds (a total of €21.3 billion) inaccessible to Hungary.
However, the government has already taken the necessary legislative measures in this area, so Hungary now has access to the €8.8 billion of funds that were "only" blocked because of judicial independence problems.
Three problem areas remain, with three problematic Hungarian laws.
2. Academic freedom
According to the European Commission, academic freedom (in von der Leyen's terms) is being violated in Hungary because, in universities that have been taken over by public interest trusts in recent years, government-appointed trustees exercise such extensive control over the academic community that they can exert direct political influence over, for example, the appointment of lecturers, curricula, research projects, and publication topics. Until this EU infringement is addressed, the Hungarian government will not be able to draw down EU funds for operational programs specifically aimed at improving higher education.
This amounts to a total of €1.95 billion of frozen money.
3. Fundamental rights of sexual minorities
The European Commission considers that the rights of sexual minorities are not guaranteed in Hungary because of a law that Fidesz calls the “child protection act” and which its critics call homophobic.
According to the EU, the law, adopted in June 2021 (and recently brought back into the spotlight by the pardon case), violates the rights of sexual minorities to human dignity, privacy, freedom of thought and conscience, and non-discrimination by banning the portrayal of transgenderism and homosexuality in publications or sex education courses for children under 18. (The European Commission has also launched an infringement procedure against the Hungarian state over the law, which is currently pending before the Court of Justice of the European Union, with judgment expected in the summer of 2024.)
According to the Helsinki Commission's analysis, three different operational programs (mainly programs for the development of children in public education) are being blocked as a result,
€ 700 million in total.
4. The problem of the Hungarian asylum system
According to the European Commission, the Hungarian state does not guarantee the right to seek asylum to those who are entitled to it. The Court of Justice of the European Union has ruled in three separate judgments that it is unlawful,
As a result of these infringements, €34 million of EU funds is frozen,
which could be used by Hungary for asylum and migration objectives.
This shows that, after addressing concerns about the judicial system, a total of €2.7 billion is still being withheld from Hungary because of fundamental rights problems, but only a small proportion of it belongs to the Cohesion Fund.
Policy issues
In fact, according to the Helsinki Commission's analysis, much more money - a total of €9.6 billion in cohesion funds - is being blocked because of so-called policy deficiencies.
That is, in a total of 11 development areas (waste management, transport planning, energy sector management, and water management are just a few examples), the EU still does not see the policy strategies of the Hungarian government.
The other procedure to block cohesion fund money is about ensuring that EU money is spent without the risk of corruption. The conditionality procedure is a relatively new EU instrument, existing since December 2020 and applied since January 2021, and has so far only been applied to Hungary.
In December 2022, the European Council decided to freeze certain funds for Hungary "to protect the financial interests of the Union" until the government makes 17 remedial measures, including in the areas of making public procurement more transparent and strengthening competition, tightening conflict of interest rules or setting up independent anti-corruption authorities.
The block involves €6.3 billion, according to official information from the European Commission,
55% of the resources of the three Hungarian operational programs most exposed to public procurement from the Cohesion Fund, TOP PLUS (regional and urban development OP), KEHOP PLUS (environment and energy efficiency OP), and IKOP PLUS (integrated transport OP). In addition, the Council decision prohibited any EU financial payments to public trusts with a public-service mission. This is the case for the vast majority of universities in Hungary. (This measure also excludes foundation-owned universities from ERASMUS mobility grants and Horizon research funding.)
The government has taken steps to raise funds, for example by setting up the now increasingly visible Integrity Authority. However, in this and other areas as well, there are still many shortcomings. So the European Commission's latest evaluation published on 13 December 2023 still did not consider the conditions fulfilled.
Anti-EU government billboard ad near the Zugló City Centre project in Budapest. (Photo: Dániel Németh / 444.hu)
As with the Cohesion Fund, Member States had to agree in advance on a plan for using the funds, committing to a pre-defined reform process to make the economy more resilient, sustainable, green, and digital. They can use RRF resources for this reform process.
Hungary's Recovery Plan was approved by the European Commission on 30 November 2022 and adopted by the Council on 15 December. But in this plan, "because of systemic corruption and interference in the independent functioning of the judiciary in the country", 27 so-called "super-milestones" are included in addition to the policy milestones and objectives. These “super-milestones” are reform targets linked to the protection of the EU's financial interests. Their achievement is a prerequisite for the unfreezing of recovery funds.
The 27 "super-milestones" include 17 anti-corruption measures already undertaken under the conditionality procedure and judicial reforms to restore the independence of the Hungarian judiciary.
We have a recent review published on 15 November 2023 by Hungarian NGOs monitoring the process. According to their findings,
the Hungarian government has met 13 of the 27 super-milestones in full and 12 in part. Two of the super-milestones are not yet met.
It is no coincidence that the Helsinki Commission has entitled its analysis – cited above – Missed opportunities. If the Hungarian government fails to meet the conditions for accessing the funds, it could lose a significant part of the money. Although there is still plenty of time to draw down cohesion funds until the end of 2027, the rules state that blocked cohesion funds affected by the conditionality procedure will be lost to the member state concerned two years after the Council's decision to launch the procedure. In the case of Hungary, this would be in December 2024. Recovery Fund money can also be spent for a shorter period, until the end of 2026.
Translated by Benedek Totth
