Viktor Orban’s government is failing to ensure the transparent use of EU funds and their independent oversight, according to a report that will embolden calls to withhold payments of EU money to Budapest.
The report by three professors, commissioned by a group of MEPs, outlines the grounds for the European Commission to activate its new rule-of-law conditionality, which allows payments of EU funds to be suspended in certain circumstances.
Budapest’s shortcomings include a failure to oversee the transparent management of the funds, insufficiently effective national prosecutorial service and inadequate judicial independence, according to the report that is due to be released on Wednesday.
Orban’s government has “already egregiously violated basic rule of law principles” as laid out in the EU’s new conditionality rules, write Kim Lane Scheppele of Princeton University, R Daniel Kelemen of Rutgers University and John Morijn of the University of Groningen.
It “cannot be a reliable steward of EU funds until these problems are corrected”, the authors add, concluding: “The commission should therefore immediately trigger the conditionality regulation with regard to Hungary.”
A spokesperson for Hungary’s government had “no immediate comment”.
The report, commissioned by Daniel Freund of the Greens/EFA group with the backing of MEPs from other groups in the European parliament, comes as the commission is facing increasing pressure to act against Budapest. Budget commissioner Johannes Hahn on Tuesday faced a cascade of demands to take immediate steps to activate the rule-of-law provision.
“We really need to end this theatre play,” said German Green MEP Terry Reintke during a debate with the commission in Strasbourg. “We don’t need any more delaying tactics, we don’t need commissioners being very concerned by the rule of law, we need action.”
Hahn defended the commission’s step-by-step process and sought to reassure MEPs that action would be taken in the autumn, and not just against one or two member states, but potentially more. “Notification letters will be sent without any delay as soon as we have gathered concrete evidence that the conditions required by the regulation are met,” he said.
The commission had to prove that there was a direct link between any rule-of-law breach and the risk of EU funds being mismanaged, he said. “Be reassured, we will act, but we will act in a way that finally we will be successful.”
The commission is also weighing how to handle the politically sensitive process of approving Orban’s multibillion-euro EU recovery plan — a decision that has become more contentious because of the backlash among MEPs over a Hungarian bill to ban content depicting or promoting LGBTI+ people in schools and the media.
On Tuesday night MEPs were discussing a draft resolution condemning the law “in the strongest possible terms” and describing it as a clear breach of EU values, principles and law. The resolution calls on the commission to ensure Budapest’s recovery plan does not facilitate the law’s implementation.
Since securing the new rule-of-law powers in its arsenal in January, the commission has been building up evidence. Some have urged Brussels to wait until the European Court of Justice rules on legal challenges to the mechanism brought by Hungary and Poland.
On Tuesday Finnish centre-right MEP Petri Sarvamaa, a leading lawmaker on the rule of law conditionality, pointed to the ample evidence the commission already had at its disposal on Hungary and Poland.
“Send the written notifications, there’s no need to wait for the ECJ ruling and there’s nothing binding us to that,” he said.
The report by the professors alleges serious problems with Hungary’s public procurement system and evidence of cronyism when it comes to the release of government funds. The EU’s anti-fraud office, Olaf, found in 2019 that Hungary had the biggest percentage of payments flagged for financial irregularities of any member state.
The national prosecution service had shown a lack of determination in pursuing allegations of high-level corruption, with questions about the independence of the judiciary in the country, the report adds.