The EU’s Financial Weapon

The European Commission’s decision to unblock €10.2 billion for Hungary, and the final outcome of the December Council during which Viktor Orbán vetoed a €50 billion package to Ukraine, occasioned a tumult of dramatic headlines and comments. Within hours, the usual Rule of Law crusaders declared that high-treason had been committed by both the Hungarian VP and by President Von der Leyen. They claimed that it was an unacceptable blackmail, a crushing defeat for the EU, and no less than an attempt to destroy it from within. Then, in a remarkably orchestrated manoeuvre, these crusaders called for the suspension of Hungary’s voting rights in the Council, and for the urgent suppression of the unanimity requirement.

Now that the storm has passed, we can look at the facts with a bit of perspective. The first question should not be why the EU unblocked €10 billion for Hungary, but rather why Hungary, after delivering significant reforms, only received that amount. In the same vein, this controversy seems to show that, for some, the EU’s Rule of Law toolkit is merely a legal alibi for political sanctions, not a sincere legal safeguard.

Let’s get the facts straight: the EU withheld €28.2 billion from Hungary, roughly the entirety of the funds to which the country was entitled under the 2021-2027 budget. Since December 13, only €10.2 billion (a little more than one third) has been released, while €18 billion remain suspended. Some €6 billion are blocked under the conditionality mechanism and around €12 billion are blocked because of the Commission’s concerns about asylum, the Hungarian child-protection law, and “risks to academic freedom” (whatever that means). For the funds to be released, Brussels imposed 27 conditions on Hungary, some of which are especially intrusive and go well beyond the EU’s remit. Yet, in one year, the Hungarian government has delivered and implemented a substantial reform of its judicial system, fulfilling much of its part of the deal.

Would Germany or France have accepted such an intrusion and played ball with the Commission? Hungary did, but despite those efforts, it has only received one third of the withheld funds, and it remains under close (and sometimes opaque) scrutiny. Moreover, other harsh sanctions—like the infamous exclusion of 21 Hungarian universities from Erasmus and Horizon—remain in force despite the fact that Budapest has been complying with Brussels since February. In the meantime, it seems enough for Tusk’s government to be appointed in order to get the money flowing to Poland. According to the European Commissioner in charge of the Budget, Johannes Hahn, “I’m sure that we will find ways to help Poland. We don’t have any doubts that they are moving, so to say, in the right rule-of-law direction.” This is not quite a thorough legal assessment; indeed, it seems a reckless presumption as the Polish Minister of Culture is literally sending the police to raid Polish public TV.

Is it fair to describe the post-reform release of one third of the withheld funds as a great victory and not the result of ignominious blackmail? Most importantly, what has Ukraine got to do with Hungary’s funds? Did the start of negotiations with a candidate state suddenly become a part of the elastic notion of ‘Rule of Law’? Of course not—unless we admit that this blurry legal notion actually comes with very serious political strings attached. I would not dare to leap to such conclusions, but countless Brussels talking heads, MEPs, and other politicians did so without even bothering to dissemble. For them, the EU Rule of Law mechanisms, and its subsequent financial sanctions, are meant to be a political tool used to make problematic nations toe the line. In other words, they are a legal alibi which can be used to justify political persecution.

Let’s not be naïve: obviously, the talks on the margins of the Council included an agreement to release some of the withheld funds in exchange for Orbán’s flexibility on Ukraine’s EU membership aspirations. True, Hungary used its veto to block and postpone the revision of the EU’s budget. But who can reasonably expect Hungary to put extra money on the table without first getting its own, especially after largely delivering on its part of the deal? If it takes a veto to remind the EU that it cannot disregard its commitments, and that it cannot turn the Rule of Law into an instrument for enforcing absolute political conformity, then so be it.

Under such circumstances, who is blackmailing who? Is it the Parliament, which is urging the Commission to disregard tangible reforms, while threatening it with a motion of censure if they dare to follow their own rules? Is it the Commission, which is invoking vague legal concepts in order to exert control over Hungary, while releasing EU funds to Poland based upon mere promises ? Or is it a member state, which is using its (perfectly lawful) veto power, while dutifully fulfilling its obligations to Brussels?

Now that the mass hysteria has faded away, now that we have carefully considered the facts and figures, I have my doubts. Is the Rule of Law a political weapon? And, if not, why did Hungary receive only €10 billion?