Brussels to announce decision to cut €7.5 billion of EU funds to Hungary over rule of law concerns

The European Commission is expected on Wednesday to recommend freezing billions of euros in EU funds to Hungary over rule of law concerns.

The announcement will be made at around 12:00 CET by Executive Vice-President Valdis Dombrovskis, Budget Commissioner Johannes Hahn and Justice Commissioner Didier Reynders.

Budapest had until November 19 to pass 17 reforms negotiated with the EU’s executive over the summer in order to secure the €7.5 billion in cohesion funds Brussels threatened to withhold as part of its rule of law mechanism.

But the European Commission believes the reforms undertaken so far do not go far enough and there is still a risk that EU funds given to the government can be misused. 

Meanwhile, the Commission is expected to endorse Hungary’s €5.8 billion post-COVID Recovery Plan — a step required before the end of the year with Hungary the only member state not to have had its plan approved yet.

But Brussels will attach some strings and demand Budapest attain 27 so-called “super milestones” in order to secure the funds. 

The 27 reforms should include the 17 remedial steps already negotiated as part of the rule of law conditionality regulation as well as reforms to strengthen judiciary independence and new rules on auditing and reporting on EU funds.

EU countries will have to vote on whether to endorse the two Commission recommendations with qualified majorities necessary for both votes to pass. 

The votes could take place at the earliest on December 6 when economy ministers gather in Brussels for an Ecofin meeting where Budapest has blocked the adoption of a global corporate tax.

Such vetoes by Budapest have been decried as blackmail by other member states and attempts by Hungary to secure concessions on other files, including access to EU funds and sanctions against Russia.