At its meeting on Tuesday in Luxembourg, the European Union’s General Affairs Council approved the release of 4.2 billion euros in cohesion funds for Hungary. This decision also lifts the measures that had restricted the participation of Hungarian foundation universities in the “Erasmus+” and “Horizon Europe” programs.
On September 23, the European Commission proposed lifting the financial restrictions introduced in 2022 after assessing the Hungarian government’s measures to strengthen the rule of law as adequate. The proposal required approval by a qualified majority in the EU Council, where member states are represented.
The decision adopted at the end of 2022 originally provided for the suspension of cohesion funds totaling approximately 6.3 billion euros. The measure was primarily justified by shortcomings in the areas of public procurement, the fight against corruption, and rules on conflicts of interest. Of the amounts that have since lapsed and been reallocated, 4.2 billion euros remain recoverable.
The government led by Péter Magyar informed the European Commission on September 9 that the necessary measures had been implemented.
The changes included expanding the powers of the Integrity Authority, tightening regulations on asset declarations and public procurement, and restructuring the institutional framework of nonprofit asset management foundations.
The Council’s decision also lifts the ban on new EU grants imposed on the affected foundations and their institutions. This restriction had prevented Hungarian universities that had changed their models from participating in the “Erasmus+” student mobility program and the “Horizon Europe” research funding program.
The issue of Hungary’s access to EU funds had already been addressed earlier. As part of judicial reforms, cohesion funds totaling approximately 10.2 billion euros were released in December 2023. On July 10 of this year, EU finance ministers also approved Hungary’s revised 10-billion-euro recovery plan.
The recovery plan includes grants totaling approximately 6.5 billion euros and loans totaling 3.5 billion euros. However, before actual disbursements can take place, it must first be verified that the agreed-upon milestones have been met. The European Commission is scheduled to complete its preliminary assessment of the disbursement requests by November 20, which could allow for the funds to be disbursed by the end of the year.
The current decision does not release all of the withheld EU funds for Hungary.
Due to concerns regarding academic freedom, an additional €2.2 billion in cohesion funds remains frozen. Furthermore, access restrictions remain in place due to regulations on child protection and asylum law, as well as certain social requirements. At their meeting on Tuesday, the ministers also discussed the Article 7 procedure initiated against Hungary in 2018 at the initiative of the European Parliament. No decision was made regarding either the closure of the proceedings or the transition to the sanctions phase.
Michael McGrath, EU Commissioner for Democracy, Justice, the Rule of Law, gave a positive assessment of the Hungarian government’s reforms in the area of democratic institutions during the meeting. At the same time, he emphasized that it is the European Commission’s responsibility to assess the current situation and that it cannot unilaterally initiate the closure of the Article 7 proceedings.
According to the commissioner, the European Parliament can withdraw its motion, and the Council of the European Union can decide to conclude deliberations regarding the procedure. The lifting of financial sanctions therefore does not in itself signify the end of the rule of law procedure.
EU funds could boost GDP growth by 0.1–0.2 percentage points in 2026 and 2027. Continue reading
Via Világgazdaság; Featured photo: Hungary Today
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