Hungary ready for compromises with Brussels to unblock recovery funds

·3-min read

Hungary is ready to strike a compromise with Brussels to end the long-standing impasse that has blocked the country's access to the EU's coronavirus recovery fund, according to a minister from Viktor Orbán's government.

"I am confident that this change, meaning my new ministerial appointment, could help give new impetus to the negotiations," Tibor Navracsics, who was recently appointed as Hungary's minister for regional development and the utilisation of EU funds, told Euronews on Thursday.

"Since Hungary is the last EU member state that doesn't have an agreement with the European Commission on a national recovery plan, our goal is to speed up the negotiations as much as possible so that we can sign this deal by the end of the year."

The Commission continues to refuse the approval of the Hungarian recovery plan over rule of law concerns that, in the executive's view, remain unaddressed.

The concerns relate to systematic irregulates across the country involving corruption, cronyism, fraud in public procurement and the allocation of public funds.

Hungary has one of the EU's highest ratios of single-bidder tenders, under which a public contract is awarded to the only company that has applied as candidate.

"Hungary remains prone to corruption and fraud involving public funds and has been subject to rule of law backsliding for years," Transparency International said last year in an open letter addressed to the Commission.

Budapest initially requested €7.2 billion in grants from the EU's €750-billion recovery fund.

But a combination of negative economic factors - a persistent power crunch, disrupted supply chains, the war in Ukraine, sanctions against Russia and soaring inflation - has made the government change its mind and asked for low-interest loans to complement the package.

Hungary is entitled to request up to €9.6 billion in loans, which are repaid over time.

In order to secure the Commission's green light, each country has to agree to carry out a series of reforms and meet a series of milestones, designed according to national characteristics.

Navracsics, who is a former EU Commissioner, said the behind-the-scenes negotiations with Brussels have yielded "pretty good solutions" at a technical level.

"On the issues of public procurement and also on the corruption concerns, we propose things where the experts of the Commission can agree. I hope to have an agreement at political level as well," he said.

"These steps are currently being fine-tuned."

The minister's optimistic assessment comes days after the Commission endorsed Poland's recovery plan, which was blocked for more than a year over controversial judicial reforms. Warsaw has committed to implement changes to its current legislation in order to meet EU standards, although legal experts suggest the tweaks are cosmetic and still give the executive too much power over the judiciary.

The green light to the Polish plan has left Hungary and the Netherlands as the only two EU countries without an approved recovery plan. The Dutch government has not yet submitted its programme.

Discussions between Budapest and Brussels have been going on since Hungary submitted its plan in May 2021 but progress has been slow.

Among the changes promised by the government to push the talks forward, Navracsics said, is a plan to reduce the proportion of single-bidder tenders in public procurement.

Hungary has for years been accused of fostering an environment of widespread cronyism and land-grabbing by the country’s political elite and oligarchs, often siphoning European taxpayers' money to fill their pockets.

The country is under the so-called conditionality mechanism, a novel procedure that can freeze EU funds if the bloc's financial interests are endangered.

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