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The EU and Hungary: Will Brussels Protect EU Values?

 3 min read / 

During its plenary session on May 17th, the European Parliament (EP) has called for launching the “Article 7” mechanism that could lead to far-reaching EU sanctions against Hungary. In theory, the procedure may result in the suspension of Hungary’s voting rights in the Council.

Protecting “EU Values”

The EP is the first European Union institution in history that has openly called for triggering a mechanism to protect “EU values” in the case of a risk of a serious breach by a Member State. In a resolution adopted by 393 to 221 votes with 64 abstentions, Members of the European Parliament condemned the serious deterioration of rule of law and democracy in Hungary.

The broad support for the historically-unprecedented resolution stemmed from MEPs’ outrage over Victor Orbán’s higher education bill targeting the Budapest-based Central European University (CEU). The bill, written in a way to affect CEU almost uniquely, has been seen as a clear attack on academic independence in the country. The European Parliament furthermore disapproved of laws tightening rules against asylum-seekers and non-governmental organisations.

Article 7 of the Treaty on the European Union foresees a possibility of suspending the voting rights of the representative of the government of a Member State in the Council of the European Union. The actual suspension of Hungary’s voting rights in the Council is unlikely – to proceed with sanctions, all the remaining Member States would have to agree that there has been a serious and persistent breach of EU values. Unanimity in the Council will be extremely difficult to reach, as Poland – another country at risk of the Article 7 procedure – will in all likelihood oppose the sanctions against Hungary.

Improbable Sanctions

However, while serious political sanctions against Hungary are improbable, Brussels has another ace up its sleeve: money. In its resolution, the European Parliament urged the European Commission “to strictly monitor the use of EU funds by the Hungarian government.” Hungary is one of the countries that benefits the most from EU funding, with EU investment generating 6.3% of Hungarian GNI and co-financing 95% of all Hungarian public investments.

Source: European Commission

In the past, Brussels has frozen money transfers to Hungary due to concerns over the public procurement system and other administrative issues. Hungary could now expect even harsher scrutiny of the country’s institutional system of distributing EU monies, potentially resulting in suspensions of EU funds. Moreover, EU funding for Hungary might be substantially reduced when the Member States discuss the next multiannual financial framework. With its economy heavily dependent on transfers from Brussels, this is a threat that Hungary should not disregard.

The EP’s resolution is also a warning sign to other non-compliers that they may face a similar fate in the future. As mentioned, Poland, Hungary’s political ally, is the largest net destination of EU funds and is also currently subject to the Commission’s “rule of law” procedure. While the European Union lacks effective political instruments to enforce compliance with the treaties, it may find defending EU values is easier through economic means. The Hungarian case will show whether there is the political will to do so.

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