A major test for both the EU and Hungary

Although the cold season has just begun in Europe, relations remain heated between Hungary and the institutions of the EU. In mid-September, the European Commission gave Budapest until November 19 to demonstrate its credible commitment to fighting corruption. The Commission now has to evaluate whether measures taken by the government of Prime Minister Viktor Orban are enough to guarantee the appropriate use of EU funds in Hungary.

A positive assessment would pave the way for the Council of the EU to approve the disbursement of funds that are badly needed in Hungary, which is experiencing financial difficulties, including its highest rate of inflation (over 21% in October) since the mid-1990s. A negative evaluation, on the other hand, could prompt the unprecedented measure of the EU suspending these funds in the first ever use of the EU’s “rule of law conditionality” mechanism.

With the credibility of the Hungarian government’s intentions seriously challenged, the final decision, which the Council is expected to take on December 6, is also a test of EU institutional commitment to standing up for the values of the European Union. By blackmailing the EU on crucial matters, however, the Hungarian government under Prime Minister Orban is seeking to tilt the balance in its favor.

On September 18, after months of negotiations, the European Commission proposed suspending 7.5 bn euros ($7.8 bn) in funds to Hungary — about a third of the funds allocated to the country under the current EU budget — because of concerns about the state of democracy, the rule of law and, more specifically, corruption there. To avoid losing access to these funds, the Hungarian government agreed to implement a list of 17 anti-corruption measures by November 19.

Among others, these measures included the extension of cooperation with the European Anti-Fraud Office (OLAF), amendments to public procurement legislation and to the operation of state asset management foundations, facilitating access to information of public interest and the creation of an Anti-Corruption Working Group as a monitoring and advisory body. Most importantly, the government pledged to establish a new anti-corruption body called the Integrity Authority to guarantee the appropriate use of EU resources.

Although the list of measures seems extensive, the reality is that none of them would bring about fundamental change or loosen the governing parties’ grip on state institutions, including the judiciary and the prosecutor’s office.

In other words, even if the measures are implemented, the essence of Fidesz’s system of governance, the so-called “System of National Cooperation,” would remain untouched.

According to a review by members of the European Parliament in mid-November, however, even these measures were not sufficiently implemented.

The establishment of the Integrity Authority is indicative of the Orban government’s half-hearted approach to resolving the dispute with the European Commission. Although this authority has the power to suspend public procurement processes in case of irregularities, file cases against state institutions if they do not fulfill their duties and inform OLAF and the European Public Prosecutor’s Office (EPPO) of serious irregularities, it cannot challenge the decisions of the public prosecutor, investigate in its own right, or assume powers from other institutions even if they are not operating satisfactorily.