In November, the European Commission announced Hungary would be given access to EUR 920 million in funding without any strings attached. That money comes from Hungary’s revised COVID-19 recovery and resilience plan and is part of a scheme called “RePower EU,” drawn up in response to Russia’s invasion of Ukraine to help Europe diversify away from imported fossil fuels and accelerate the green transition. The funding, which Hungary will get in two tranches this year, is effectively seed money to provide liquidity and help jump-start clean energy projects.
It sounds a lot, and it is. But Hungary has been told that, to unlock the remaining EUR 9.5 bln of RRF money, it will have to fulfill 27 so-called “super milestones” and four “horizontal enabling conditions” (it would not be the European Union without potentially bamboozling jargon). These are essentially reforms to fight corruption and restore the rule of law. There was a further EUR 22 billion in cohesion funds frozen since December 2022.
Even better news came for Hungary in December, when the EC announced the release of EUR 10 billion in cohesion funds (according to IntelliNews, that represents three years of cohesion funding), saying Hungary had made the progress the commission required on judicial reform.
This was important for several reasons. Some of it was symbolic: it enabled Viktor Orbán’s government to proclaim a victory domestically and rehash its argument that it was fighting the “enemies” in Brussels to win what was rightfully due it. More importantly, it gives the rating agencies greater confidence that a deal can be done to unlock all the funding and makes it less likely they will downgrade Hungary, making debt financing more expensive. EUR 11.7 bln in funding remains frozen, with Hungary being asked to take action on corruption, asylum seekers, its anti-LGBT+ law and concerns over academic freedom before it is released.
After all that receiving, it was time for Hungary to do some giving, and that it did this week, in a move that surprised many. At the EU’s December summit, Orbán, at the suggestion of the German Chancellor, had stepped out for a metaphorical coffee break to allow the other 26 member states to vote unanimously to open accession talks with Ukraine. A few hours later, however, he vetoed a four-year EUR 50 mln financial aid package, saying it should not come from the EU budget.
In the intervening period, I am told he has come under increasing pressure from other leaders to drop his veto while they have, in parallel, been exploring ways to work around Hungarian opposition. Perhaps the pressure began to tell. Then again, perhaps Orbán, currently the longest-serving PM in the EU, saw the potential for more deals to release more money. Either way, citing three EU diplomats, Politico reported on Jan. 9 that Hungary had suggested it would drop its veto if the aid package were voted on annually in EUR 12.5 bln tranches. If nothing else, it would give the Hungarian PM four opportunities to block the aid, or at least dangle the threat of doing so in the hope of some quid pro quo. Interesting times lie ahead. Happy New Year!
Robin Marshall
Editor-in-chief
This editorial was first published in the Budapest Business Journal print issue of January 12, 2024.
Producing journalism that is worthy of the name is a costly business. For over 30 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.
