EU Keeps Hungary Funds Frozen as Rule-of-Law Conditions Persist
The European Commission continues to maintain its position on Hungary, recognizing some recent moves by the government led by Viktor Orban as a step in the amended direction, while stressing that those steps do not yet remove the risk of the measures the bloc plans to implement soon. The core focus remains ensuring judicial independence, reversing a downward trend in the rule of law, and advancing anti-corruption reforms. For now, Brussels has decided to keep the funds frozen, totaling 13.3 billion euros, comprising 7.5 billion euros in cohesion funds and 5.8 billion euros under the Next Generation EU framework for 2021-2027. Payment of these funds will stay paused until Budapest demonstrates full compliance with agreed reforms that guarantee judicial independence.
The first decision centers on a conditionality mechanism designed to protect the EU’s financial interests in light of concerns about the rule of law in Hungary. This mechanism can be activated where there is a risk to the EU budget. In mid-September, the European Commission proposed freezing roughly one-third of Hungary’s cohesion funds under the current budget framework. After weeks of debate, Orban presented a package of corrective measures, including a concrete reform calendar. By the deadline of 19 November, Brussels judged that progress remained insufficient.
“Despite the measures implemented, a risk to the EU budget persists because the remaining corrective steps are structural and horizontal in nature,” the Commission stated. It noted that, while several reforms have been started or are underway, Hungary has not fully carried out the core elements of the 17 required corrective measures. These include creating an Integrity Authority and establishing a procedure for judicial review of court decisions. Consequently, the European Community Executive proposed continuing the plan to freeze funds for the three operational programs, and no legal commitments for public funds would be undertaken until Hungary meets the conditions. The final decision rests with the ministers of Economy and Finance and requires a qualified majority among the Twenty-Seven before 19 December, according to EU officials.
Hungarian Recovery Plan
The second decision concerns the recovery plan and the 5.8 billion euros allocated to Hungary; this funding package is the only component awaiting ratification and has lingered in the EU’s decision-making process for about a year and a half due to rule-of-law concerns. The approval window expires at year’s end, and Brussels indicates readiness to approve the plan. The final judgment will be made by the Twenty-Seven, but funds will not be disbursed until Orban’s government has fully implemented the plan. Valdis Dombrovskis, a vice-president of the Commission, stressed that the milestones are binding and must be met before any payment request can be made.
Four milestones require binding deadlines centered on judicial independence. First, the creation of a National Judicial Council whose members are elected by judges themselves, serving as a vital check and balance to safeguard judicial independence and to maintain a supreme court with a single non-renewable mandate.
The schedule also includes measures such as empowering the judiciary to refer preliminary questions to the EU Court of Justice and reinforcing ordinary justice to align with European standards. These steps are described as key, or super milestones, and must be fulfilled in full for Hungary to receive any payment. Partial compliance would block any partial funding, and delays after the first tranche would likely stall further reforms. Didier Reynders, the EU Commissioner for Justice, underscored the seriousness of these requirements and their direct link to the rule of law and EU fiscal rules, as noted in EU Commission briefings.