The European Union (EU) has officially decided to withdraw €1 billion from Hungary. This marks the first time the EU has permanently taken funds away from a member country because it did not follow the EU’s rule-of-law standards. Hungary’s failure to fix issues such as corruption and judicial independence led to this action. This €1 billion loss is part of a larger amount of around €19 billion in frozen funds due to Hungary’s inability to meet EU-required reforms.
Since 2010, Hungary, led by Prime Minister Viktor Orbán, has been criticized for actions that were seen as weakening democratic values. These actions included limiting the independence of the judiciary, controlling media freedom, and allowing corruption, especially with EU funds. These issues led to tensions between Hungary and the EU, resulting in financial penalties like the loss of funds.
The Rule-of-Law and the EU’s Bold Decision
In January 2021, the EU introduced a rule called the Rule-of-Law Conditionality Regulation. This regulation gives the EU the power to suspend or take away funds from countries where the rule of law is being violated and it affects the EU’s financial interests. Hungary became the first country to face this regulation when it failed to address the issues pointed out by the EU.
The EU is built on values such as democracy, freedom, and equality. By using this regulation, the EU is showing that it takes these values seriously and is ready to take action if any country’s actions threaten them. In Hungary’s case, the EU has applied this rule to protect its financial interests and to ensure that the country follows the democratic principles that are at the heart of the EU.
Hungary’s Violations and the EU’s Concerns
The EU has pointed out several serious violations in Hungary’s policies, which are seen as not aligning with EU standards. The key issues are:
- Judicial Independence: The EU has raised concerns about reforms that seem to reduce the independence of Hungary’s courts. This means that the judicial system might not be able to make decisions fairly and without interference.
- Corruption: There have been many allegations of corruption in Hungary, especially in the way EU funds have been managed. The EU has expressed concern that these funds are being misused or mismanaged, which is not acceptable under EU rules.
- Media Freedom: Hungary has been criticized for imposing restrictions on the media. This includes limiting freedom of speech and reducing the number of different opinions available to the public, which goes against the EU’s commitment to media freedom and diversity of thought.
- Human Rights: The EU has also raised concerns about Hungary’s treatment of minority groups, especially the LGBTQ+ community. Policies that discriminate against certain groups have been seen as violations of basic human rights and equality.
Due to these violations, the EU decided to withhold a significant amount of funds from Hungary. The EU’s decision aims to protect its values and ensure that Hungary reforms its policies to meet these standards.
Economic Struggles and Political Defiance
In response to the EU’s concerns, Hungary promised to make several changes. The country committed to implementing 17 judicial reform measures. These were meant to address some of the issues the EU had raised, but the European Commission concluded that these measures were not enough to resolve the problems. As a result, Hungary missed its chance to receive the frozen funds, and the financial penalties continued.
Hungary also failed to meet deadlines to pay fines imposed by the European Court of Justice for not following EU asylum laws. This led to further financial penalties. The country’s lack of progress in both areas has contributed to the continued suspension of EU funds.
The loss of EU funds comes at a particularly tough time for Hungary’s economy. The country is currently facing a technical recession, which means its economy is shrinking. Some key economic indicators paint a worrying picture for the country:
- Budget Deficit: Hungary’s budget deficit is over 4.5% of its Gross Domestic Product (GDP), which means that the country is spending more than it earns.
- Economic Contraction: In the third quarter of the year, Hungary’s GDP shrank by 0.7%, showing that the economy is not growing as expected.
The withdrawal of EU funds makes it harder for Hungary to stimulate growth and investment. These funds are often used to support key areas like infrastructure, education, and health. Without this money, the country may struggle to recover economically.
Despite the economic setback, there are no signs of political instability in the country. Prime Minister Orbán’s government has remained defiant in the face of EU criticisms. The country’s leaders often argue that the EU’s actions are attacks on its sovereignty, or its right to make its own decisions without outside interference.
However, not everyone shares this view. Growing voices of opposition within the country argue that the government’s policies are damaging the nation’s relationship with the EU. Critics believe that these actions are negatively impacting the economy and the country’s standing in the international community.
The loss of EU funds and the ongoing economic challenges will likely continue to fuel debate and political division. Moving forward, the government will need to decide how to address the issues raised by the EU, both to secure financial support and to improve its democratic standards.
