Veto on EU Financial Package: EU Core Values Deserve Clear Message

Last Monday, Hungary and Poland blocked the EU's historic financial package of 1.82 trillion euros. The right-wing nationalist governments of the two countries want to prevent the rule of law compliance conditionality in the distribution of EU funds. Meanwhile, the recently declared "State of Danger" in Hungary is being used by the government to amend the constitution again under the pretext of the Corona pandemic and to govern by decree. The new draft laws restrict the rights of LGBTI persons, undermine the transparency of expenditure of state funds and reduce the influence of opposition parties in the next parliamentary elections.

The vetoes of the governments in Hungary and Poland block the disbursement process of almost 1.1 trillion euros for the EU budget and 750 billion euros for the coronavirus recovery fund. The EU financial package includes around 23 billion euros for Polish and around 6 billion euros for Hungarian citizens to fight the corona recession. In addition, Poland and Hungary are both major recipients of EU funds and have been severely affected by the second pandemic wave.

According to András Fekete-Győr, leader of the Hungarian liberal party Momentum, "the rule of law mechanism to prevent the theft of EU money and the destruction of democracy is unacceptable for the Prime Minister, who has been turning taxpayers’ money into his family’s property for years now." Fekete Győr believes that Orbán's move will plunge Europe into a deep recession and hinder the recovery of the Hungarian economy if it remains blocked. Hungarian Justice Minister Judit Varga, on the other hand, calls linking the budget to the rule of law mechanism political blackmail by the European Parliament and some Member States.

These are strong accusations. The question is, why is the Hungarian government resisting so vehemently against the EU's rule of law mechanism? The answer is multi-layered: Orbán is fighting on several fronts. The Hungarian health care system is in a desolate state, opposition parties are getting stronger and speak with a common voice more often, and there are growing calls on the international scene not to ignore values such as democracy and the rule of law during the pandemic.

Orban Gears Up For the Next Parliamentary Elections

Viktor Orbán's national-conservative government is accused of using the Corona pandemic as a pretext for consolidating its power and further obstructing the opposition in the country. This was already evident during the first wave in spring, when the Hungarian parliament, in which Orbán's party Fidesz has the constitution-changing two-thirds majority, passed the emergency law without a sunset clause.

On 10 November, due to the worsening corona situation in the country, the Hungarian Parliament adopted a law imposing a new state of emergency, which allows the government to govern by decree for 90 days. However, a few minutes before the law came into force, the government also submitted to the Parliament a number of other draft laws and constitutional amendments which have nothing to do with corona protection measures and are disproportionate: For example, a constitutional amendment has been introduced to facilitate the transfer of public funds to financially unsupervised foundations close to the State. The new measures would also ensure that public money transferred to public trust funds would be untouchable for future governments.

Another amendment aims to weaken the rights of LGBTI persons. According to the amendment, the Constitution would state that the sex of mothers is female and that of fathers male. By waging a smear campaign against sexual minorities, the Hungarian national conservative government is diverting attention from corruption problems at home.

In addition, the government intends to amend the electoral law, which will affect the coordination of opposition parties before the forthcoming parliamentary elections. With the amendment, the government of Viktor Orbán intends to increase the number of individual candidates necessary to ensure that the parties have a nationwide party list in the parliamentary elections. According to opposition parties, the government is also seeking to thwart an opposition electoral alliance.

The Hungarian Helsinki Committee is very critical of the government's amendments. According to a report by the human rights NGO, the planned amendments would significantly restrict the rights of LGBTI persons and undermine the transparency of the state and freedom of information.

However, in the context of the deadlock on the EU financial package and the dispute over the EU rule of law mechanism, the most significant amendment to the Constitution is the one introduced by the Hungarian government to limit the definition of public funds. It is feared that the new definition could make the fight against corruption in the country considerably more difficult, as the financial resources of foundations close to the state would escape public control. Critics of the government fear that through these foundations the government will be able to channel public money to its friends by converting it into private money.

Vague Wording Does Not Work When Defending the EU's Fundamental Values

It could be argued that the EU is now paying the price for the incomplete settlement of the rule of law dispute during the July summit, when the multi-billion euro Corona recovery package and the seven-year EU financial framework were agreed. To reach an agreement after lengthy negotiations, leaders agreed to link the distribution of funds to compliance with rule of law principles, but left the text open to interpretation.

Recent developments in Hungary are further evidence that a general reference to the rule of law mechanism is not sufficient. The defence of EU fundamental values deserves clear and unambiguous wording.

Toni Skorić is project manager for Central Europe and the Baltic States at the Foundation's office in Prague.