Brussels to unfreeze Hungary funds as it seeks help for Ukraine

The European Commission is preparing to release billions of euros in EU funds to Hungary currently frozen because of rule of law concerns, in a move that could secure Budapest’s support for an increase to the bloc’s budget and significant financial assistance to Ukraine, Report informs via the Financial Times.

Releasing the funds, which have been frozen since last December, would mark a victory for Prime Minister Viktor Orbán, who has vowed not to agree to any increase in the EU budget until Hungary’s access to it is restored.

The commission intends to unfreeze about €13 billion in funding before the end of November, three officials briefed on the discussions told the FT. Two of those said the disbursement was partially informed by the desire to secure Orbán’s support for the budget increase.

Last December, the EU froze €22 billion in cohesion funds allocated to Hungary after deciding it was not complying with rules protecting human rights and the rule of law. Cohesion funds are designed to help less developed members of the 27-country bloc close the investment gap and improve their infrastructure.

Hungary enacted judicial reforms in May in response to demands from Brussels — which would allow the commission to unlock €13bn, more than half of the frozen funding, the officials said on condition of anonymity.

Stefan de Keersmaecker, a spokesman for the commission, said Brussels had written to the Hungarian government on September 26 seeking “clarifications” on some details of the reforms.

“As soon as Hungary will have replied to these questions, the commission will continue its assessment,” he added.

Progress on restoring Hungary’s access to the funds comes as Brussels seeks to win unanimous support for its increased budget before the end of the year, in particular to ensure continuing financial aid to Kyiv.

Adding to the sense of urgency is the decision by the US Congress last week to jettison $6bn worth of aid for Ukraine in order to agree a new government funding bill.

The commission has proposed a €66bn increase to the EU’s shared budget to cover increased costs, part of which would contribute to a €50bn financial support program for Kyiv to help cover its costs for the next four years.

Several capitals have objected to the size of the proposed increase, including Berlin. The budget top-up needs backing from all 27 member states who will be required to make additional contributions from their national budgets.

Any decision to unblock payments to Budapest is likely to provoke condemnation from the European Parliament, which has repeatedly demanded a harsh line against Orbán’s government. The parliament has no formal power to block payments to capitals, but it can hold up a potential agreement on the EU’s budget increase.