Hungary’s government presents the first anti-graft bill to avoid losing EU funds

Hungary’s government presents the first anti-graft bill to avoid losing EU funds

Hungary’s government presents the first anti-graft bill to avoid losing EU funds

Hungarian Prime Minister Viktor Orban waves to the audience during the general session of the Conservative Political Action Conference (CPAC) in Dallas, Texas, U.S., August 4, 2022. REUTERS/Go Nakamura/

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  • The EU leader proposes to take 7.5 billion euros from Hungary
  • Says remedies proposed by Hungary could work if implemented well
  • Hungary promises to fulfill all commitments to unlock EU funds

BUDAPEST, Sept 19 (Reuters) – Hungary’s government put the first of several anti-corruption bills before parliament on Monday as Budapest fights to avoid losing billions of euros in EU funding.

The European Union’s leader on Sunday recommended suspending funds worth 7.5 billion euros ($7.48 billion) for what it sees as Hungary’s failure to fight corruption and uphold the rule of law. read more

The European Commission also set demands on Hungary to retain access to the funding, including new legislation, which Hungary said it would meet.

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Justice Minister Judit Varga said on her Facebook page that she had submitted the first bill to parliament as the government “will focus on drafting and implementing the commitments (to the EU) in the coming weeks and months.”

“Hungary can enter the year 2023 without losing any EU funds,” Varga said.

The bill amends legislation relating to Hungary’s cooperation with the EU’s anti-fraud office OLAF, ensuring that OLAF receives support from Hungarian tax authorities in its investigations of EU-funded projects and access to data and documents on the ground.

In addition, it changes the rules for state asset management foundations, obliges them explicitly to provide public procurement for projects and tightens the conflict of interest rules in their management.

Hungary’s case is the first in the EU under a new sanction meant to better protect the rule of law and fight corruption in the 27-nation bloc.

Nationalist Prime Minister Viktor Orban, in power since 2010, has repeatedly clashed with Brussels over his policies, which it sees as eroding democracy in Hungary.

But with major challenges linked to rising energy costs and double-digit inflation, a weak forint and a slowing economy, the veteran prime minister appears willing to comply with EU demands to finally create institutions that will reduce corruption risks in EU-funded projects.

“The latest developments in Brussels certainly come at a bad time for Orban, who is struggling with a number of political and economic problems caused by both global issues, especially rising energy prices, so he is likely to go further to satisfy Brussels’ demands,” Mujtaba said Rahman, managing director for Europe at Eurasia Group.

He said Budapest was likely to secure the pending deal, but it would not resolve all the outstanding disputes over other parts of EU funds.

“The biggest problem for Orban is the money tied up in the recovery fund, because the commission has more discretion whether to give it the green light or not,” Rahman said.

Like most EU countries, Hungary last year submitted its plan for how it would use EU subsidies to make its economy more environmentally friendly and high-tech after the COVID-19 pandemic. It has yet to get approval on that as well.

If Budapest does not get EU funds, the forint – which has lost 8% this year – will almost certainly fall further, complicating efforts to curb inflation and exposing Hungarian assets to any negative shift in global sentiment. read more

Development Minister Tibor Navracsics, in charge of negotiations with the EU, said on Sunday that Hungary will meet all 17 commitments it has made to the commission to avert the loss of any funding.

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Reporting by Krisztina Than, additional reporting by Gabriela Baczynska; editing by Raissa Kasolowsky and Grant McCool

Our standards: Thomson Reuters Trust Principles.

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