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The European Commission pledged on Thursday to uphold standards of judicial independence in Hungary through EU pandemic recovery funds, bowing to growing pressure from within its own ranks.
The move came after a group of EU commissioners – echoing many MPs and diplomats – urged the Berlaymont to get tougher with Hungary on rule of law issues, according to officials familiar with the proceedings.
The triggering incident was the Commission’s decision on Sunday to essentially offer Hungary a deal: if it could adopt a list of anti-corruption reforms, Brussels would not cut 7.5 billion euros from regular EU funds of the country, as she threatened to do.
However, judicial independence has been left off the list of reforms – a major concern for civil society groups who have warned that Hungary is dangerously backtracking on democratic standards.
At a meeting on Sunday, commissioners argued that if that were the case, the Commission should use a parallel process – negotiations over Hungary’s access to money from a separate post-pandemic recovery fund – to ensure that Hungary also makes more extensive judicial changes. .
Commissioners pushing for the two-track process included climate chief Frans Timmermans, competition commissioner Margrethe Vestager, justice commissioner Didier Reynders, rule of law chief Věra Jourová and home affairs commissioner Ylva Johanson.
In addition to the Commissioners’ voices, diplomats and MEPs also expressed concern about the need for better guarantees for the judicial system.
“It seems pretty obvious,” said a Western European diplomat, “that this is essential to ensure the fight against corruption, but it is clearly being left out here.”
A long-term fight
Brussels and Budapest are embroiled in a years-long dispute over rule of law standards.
Earlier this year, the Commission took the unprecedented step of triggering a new power that allows the bloc to cut regular EU funds for breaches of the rule of law. That process led the Commission on Sunday to take the seemingly major step of recommending a 7.5 billion euro cut to Hungary’s EU funds.
But the decision was almost instantly undermined by the Commission’s decision to simultaneously set out a way out allowing Budapest to keep the funds, listing 17 reforms it must adopt this autumn to tackle corruption.
The matter now falls to the Council of the EU, which can take the final decision to reduce the funds within three months.
Hungarian MEP Klára Dobrev, a member of the opposition Democratic Coalition party, described the 17 reforms as “very limited”.
‘Protection of the EU budget cannot be achieved without the independence of the judiciary,’ she said, while raising concerns about media freedom and a series of alleged corrupt practices involving companies favorable to the government.
European Budget Commissioner Johannes Hahn, however, defended Berlaymont’s approach.
“Not every instrument is equally suited to every rule of law issue,” he said in an interview on Wednesday.
The rule of law mechanism triggered against Hungary “is clearly aimed at protecting the European budget”, he added, noting that “the issue of public procurement, corruption, conflicts of interest was the predominant in our assessment”.
For Hahn, Hungary’s willingness to introduce reforms is already a positive sign.
“We want to improve the living conditions of Hungarian citizens,” the commissioner said, saying the quick timeline for a Council decision had helped put Budapest on the table.
“Our priority,” he said, “is not to punish the Hungarian government” but to create an environment in which Brussels can be assured that European taxpayers’ money “is well spent.”
When asked why Budapest was proposing reforms after months of stalled negotiations, the commissioner joked: “Money makes the world go round”.
And, he said, while negotiations over Hungary’s regular EU funds can help tackle financial corruption, further negotiations could help address related longer-term issues. This is where stimulus money comes in.
Hahn also pointed out that the Commission can still kick-start the rule of law process on Hungary’s regular EU funds.
The Hungarian government, meanwhile, argued that the planned anti-corruption reforms would be enough for it to access both regular EU budget funds and stimulus funds.
Questions of judicial independence “were explicitly ruled out by the president of the commission during an informal meeting with the prime minister last year”, a senior Hungarian official said.
Commission President Ursula von der Leyen, the official said, “has made a firm promise that the independence of the judiciary will not be part” of the pandemic fund talks.
Asked if von der Leyen had made such a promise, Commission spokesman Eric Mamer declined to comment on the president’s personal conversations.
Nevertheless, the spokesperson said: “Hungary will need to include measures to strengthen judicial independence in the design of its recovery and resilience plan.”
And, Mamer noted, the Commission is still concerned about issues such as how justices are appointed to the country’s Supreme Court.
Meanwhile, time is running out. The Commission has said Hungary needs its recovery plan to be formally approved by the end of the year – a lengthy process that could take up to three months – or risk losing 70% of its envelope.
Commission officials expect Budapest to submit its plan by the end of September, after which the Commission could take up to two months to assess it and forward it to the Council, where EU countries have up to a month to approve it. The last step would be for the Commission and Hungary to sign a financing agreement.
At the same time, the Commission is also expected to assess the 17 reforms promised by Hungary later this autumn.
The timetable is tight, but Brussels officials say they believe the prospect of losing billions is pressuring Budapest to move on. And if the Commission’s current plans materialize, they could also have an impact on the wider rule of law debate.
The Pandemic Recovery Package, Mamer said, “is one way to address issues related to judicial independence and where close monitoring by the Commission can be ensured.”