The European Union will freeze funding for members flouting democratic rules of the club, its chief executive said in her annual policy speech on Wednesday, as billions are at stake for Hungary over corruption.
The EU’s executive has until next Wednesday to propose cutting funds for Hungary over its public procurement laws that the Brussels-based executive has long denounced as feeding corruption.
The Hungarian forint and bonds weakened on Wednesday after local media reported that the Brussels-based European Commission could propose that financial sanctions be imposed on Hungary.
Hungary’s veteran Prime Minister Viktor Orban denies EU criticism but is pressure to secure funds for his ailing economy. Budapest promised setting up an anti-corruption agency and said repeatedly it was hoping for a deal with Brussels.
But the Commission has so far been cautious over the charm offensive, with sources saying the devil was in the detail and distrust is running high after years of acrimonious feuds with Orban over the rights of migrants and gays, as well as media and academic freedoms.
“Today we all see that we must fight for our democracies. Every single day,” European Commission President Ursula von der Leyen told European lawmakers. “It is my Commission’s duty and most noble role to protect the rule of law.”
CORRUPTION
Von der Leyen said the Commission would push to bring back into line countries like Poland that undermine judicial independence, and would stop EU funds from flowing to those that undermine liberal democratic tenets.
“I would like to focus on corruption, with all its faces,” she said.
Hungary had irregularities in nearly 4% of its spending of EU funds in 2015-2019, according to the bloc’s anti-fraud body OLAF, the highest among the 27 EU countries by far.
Brussels says Hungary had one of the highest single-bidding rates in the EU, leading to systemic over-pricing, and has called for more transparency, real competition and accountability in Hungarian public procurement.
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