Yesterday evening (Monday), the Committee of Permanent Representatives in the Council of Member States decided to suspend EU funds of around 6.3 billion euros to Hungary. The Council thus follows the Commission’s proposal, but reduces the amount of the suspensions by 1.2 billion euros. The decision of the Permanent Representatives still has to be approved in writing by the responsible ministers this week, but this is considered a formality. The decision thus represents the final step in the rule of law conditionality procedure against Hungary, which has been ongoing since April 2022.

Yesterday’s decision was taken as part of a larger deal. The Hungarian government had most recently blocked both the aid to Ukraine as well as the agreement on a global minimum tax in the Council. Yesterday, both vetoes were dropped. In return, the Permanent Representatives gave the green light to Hungary’s recovery plan, clearing the way for the disbursement of recovery funds amounting to 5.8 billion euros to Hungary. Before the first transfers can be made, however, corresponding milestones must be met. These include not only the 17 reform proposals from the rule of law conditionality procedure, but also four additional reforms in the justice sector.

Daniel Freund, Green negotiator for the Rule of Law Conditionality Mechanism in the European Parliament’s Committee on Budgetary Control, comments:

“Autocrats in the EU will now have their EU funds frozen. This decision is historic. Viktor Orban’s attempts at blackmail were not successful. He is now getting the receipt for his systematic dismantling of democracy. The penalties come late and are small. But the fact that there is finally a majority in the Council for the rule of law is a bright spark of hope for Europe’s values.”