EU proposes to suspend billions in funds to Hungary

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BRUSSELS (TNZT) — The European Union executive on Sunday recommended that the bloc suspend about €7.5 billion (dollars) in funding to Hungary amid concerns over democratic backsliding and the possible mismanagement of EU money.

The European Commission, which proposes the bloc’s laws and ensures they are enforced, said it acted “to protect the EU budget and the EU’s financial interests against violations of the rule of law in Hungary.”

EU Budget Commissioner Johannes Hahn said that despite measures Hungary has proposed to address the shortcomings, the committee is recommending the suspension of funds “at an estimated amount of €7.5 billion”.

The money would come from “cohesion funds” allocated to Hungary. This envelope of money, one of the largest parts of the bloc’s budget, helps countries bring their economies and infrastructure up to EU standards.

Any action to suspend the funds must be approved by EU member states, and this requires a “qualified majority”, representing 55% of the 27 members representing at least 65% of the total EU population.

They have one month to decide whether to freeze Hungary’s assets, but can extend that period to two months in exceptional circumstances. The committee recommends that member states allow until 19 November to give Hungary more time to allay the concerns.

The commission has accused Hungarian Prime Minister Viktor Orban for nearly a decade of dismantling democratic institutions, taking over the media and violating minority rights. Orban, who has been in office since 2010, has denied the allegations.

After a meeting of EU commissioners in Brussels who unanimously endorsed the move, Hahn welcomed Hungary’s offer to resolve the issue and said the proposed corrective action is “going in the right direction”.

The commission’s concerns focus on public procurement — purchases by the state of goods and services or for the implementation of projects using EU funds. Critics say the award of such contracts has enabled Orban’s government to channel large sums of EU money into the companies of politically connected insiders.

A senior EU official pointed to “systematic and systemic irregularities, shortcomings and weaknesses in public procurement linked to very high one-time bid rates”. Officials estimate that about half of Hungarian public tenders are awarded following single-bid procedures.

The committee also has “serious concerns about detecting, preventing and correcting conflicts of interest” as well as a number of public interest trusts that manage significant funds, particularly in the field of education.

In a resolution Thursday, lawmakers said the Hungarian nationalist government is deliberately trying to undermine the bloc’s democratic values.

They said the government in Budapest – which Orban characterizes as an “illiberal democracy” – has become “a hybrid regime of electoral autocracy.” In part, they accuse the EU member states of turning a blind eye to possible abuses.

French Greens MP who accompanied the resolution through the assembly, Gwendoline Delbos-Corfield, said that “for the first time an EU institution is declaring the sad truth that Hungary is no longer a democracy.”

The case, brought by the commission against Hungary in April, is another step in using a new mechanism that will allow the EU to take action to protect its budget. It does not target Member States for general violations of EU law.

The mechanism is seen as the EU’s most powerful weapon to prevent a growing anti-democratic drift in some countries. Commission officials have said Hungary has consistently failed to implement EU recommendations for more than 10 years.

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