(Bloomberg) – The European Union’s break with Hungarian Prime Minister Viktor Orban’s regime has been laid bare in a cutting letter listing allegations of corruption and rule of law violations, raising the risk that the nation ultimately loses billions of euros in crucial funding.
The European Commission’s missive, sent to Budapest on Wednesday, is striking in both its level of detail and its breadth, linking the erosion of the rule of law during Orban’s 12-year rule to corruption, according to a report. person familiar with the contents of the letter who asked not to be identified because the contents are not public.
The text of the letter, which runs to dozens of pages, cites “serious irregularities such as conflicts of interest, fraud and corruption, indicative of violations of the principles of the rule of law”.
The document came after the EU executive on Wednesday approved the triggering of its new rule of law mechanism, which allows the bloc to eventually cut funding to members who flout its values in a way that carries also affect the financial interests of the community. Hungary is the first country targeted by what is seen as a belated effort by the world’s largest trading bloc to hold renegades to account in the club of democracies.
“The continuation of the facts described over more than ten years indicates that there is a continuous mismanagement of EU funds and a persistent failure of the Hungarian public authorities to effectively protect the financial interests of the Union”, according to the letter. , signed by Budget Commissioner Johannes Hahn on behalf of the EU executive.
At stake is more than 40 billion euros ($42 billion) in EU funding for Hungary until 2027. The commission is already withholding Hungary’s 7.2 billion euro share in its pandemic stimulus fund due to corruption concerns, a move Orban’s government has repeatedly alleged. was politically motivated due to its repression of LGBTQ rights.
The EU letter, which arrived in Budapest a few weeks after Orban won a fourth consecutive term in elections, also underlines concerns about the will to tackle high-level crime and the independence of parts of the judicial system. Hungary ranks 73rd in Transparency International’s latest Corruption Perceptions Index, lower than any EU member except Bulgaria.
Hungary is in intensive talks with the commission to address its concerns, including the relatively high level of single tendering in public procurement, Cabinet Minister Gergely Gulyas told reporters on Thursday. He said the two sides were close to a deal, which he said should pave the way for the release of Covid recovery funds.
Given the EU’s long list of concerns, this may be wishful thinking.
Negotiations could take “at least six to 12 months” and Hungary risks “significant cuts” in EU funding, ratings firm Scope Ratings said in a report on Friday. The stalemate could “define EU-Hungarian relations for years to come”, he said.
Unless Hungary manages to respond to the committee’s points, the dossier could ultimately be sent to the EU leaders’ summit where member states would need a supermajority to implement budget cuts.
“The ongoing negotiation process is expected to be long and protracted,” Scope Ratings said.
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