As always, Hungarian Spectrum welcomes democratic voices from and about Hungary. Today we are publishing an article by Hungarian experts on EU affairs. They asked not to publish their names. The reason for this should be obvious if you have read the study Political discrimination in Hungary.
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More and more high-level politicians are calling for cutting EU funding to Hungary because it does not respect the fundamental values and, in certain cases, even the legislation of the European Union. For example, such statements have been made by Emmanuel Macron, President of the France, Christian Kern, Chancellor of Austria, and Günther Oettinger, Commissioner of the European Commission responsible for the budget. Vivian Reding, member of the European Parliament and former EU commissioner for justice and fundamental rights recently declared: “This would be the most effective way to influence the behavior of a government like the Polish one – making a link with the money. It’s the only thing they understand.” Gajus Scheltema, the ambassador of the Netherlands to Hungary, referring to the Hungarian government in an interview a few days ago, declared: “The argument over what happens with our money is indeed growing ever fiercer. We can’t finance corruption, and we can’t keep a corrupt regime alive.”
However, when speaking about the violations of the principles of democracy and the rule of law in EU member states, it is often said that at present there is no legal ground to suspend EU funding to the countries concerned. The German government started to investigate the possibilities to enable the European Commission to freeze funding for EU member countries that don’t comply with the EU’s standards regarding the rule of law – during the next budget period, i.e. 2021-2027. A recent editorial in The Economist (Stop spoiling Hungary’s prime minister – What to do when Viktor Orban erodes democracy) proposes that “the EU should use upcoming budget negotiations to apply fiscal pressure.” Michael Meyer-Resende, executive director of Democracy Reporting International, proposes in his article in Politico (How to fix Europe’s ‘rule of law’ blindspot – Freezing funding to misbehaving members will arm the bloc to withstand authoritarian assaults on democracy) that after 2020 the multi-year agreements which regulate the paying out of EU funds to member states should stipulate that “funds can be stopped following serious breaches of obligations on democracy, human rights or the rule of law.” All this means that not much would happen until 2021, which is certainly very worrying in view of the tendencies in the countries concerned.
In our opinion, there is no need to wait until 2021, as existing EU legislation provides sufficient legal ground for suspending EU funding to Hungary. Moreover, we are convinced that if the European Commission had acted in accordance with EU legislation, it would have suspended EU funding to Hungary a long time ago.
Article 30 of the EU’s Financial Regulation (966/2012) states, among other things, that EU “funds shall be used in accordance with the principle of sound financial management, namely in accordance with the principles of economy, efficiency and effectiveness.” Also, according to this regulation, “The principle of efficiency concerns the best relationship between resources employed and results achieved.” Let us look at one of the countless concrete examples which prove that the Hungarian government uses EU funds in a way that contradicts this principle. (The readers of Hungarian Spectrum are certainly familiar with the details of this example; however, it seems expedient to summarize it here.)
Lőrinc Mészáros is a simple gas-fitter and mayor of the small village of Felcsút where Hungary’s present prime minister, Viktor Orbán, grew up. After Orbán came to power in 2010, the minor company of Mészáros and his wife suddenly started to get enormous orders from the government to implement investments in a wide variety of fields, almost exclusively funded by EU money. By now Mészáros is one of the richest people in Hungary. Last year the most-read political daily newspaper in Hungary was bought and closed by Lőrinc Mészáros. This move came just after the newspaper published investigative articles about the corruption affairs of two close associates of Viktor Orbán. Lőrinc Mészáros also bought the overwhelming majority of the regional newspapers, which now echo only government propaganda. We are certain that all this contradicts the provision of the Financial Regulation on “the best relationship between resources employed and results achieved.”
Furthermore, according to the Financial Regulation, “The principle of effectiveness concerns the attainment of the specific objectives set and the achievement of the intended results.” Let’s see another striking example of the violation of this principle.
The Hungarian government announced that it will allocate in 2017 and 2018 most of the EU money available for the funding period 2014-2020, and in fact, it has already started to implement this measure. It is clear that the only purpose of this government decision is to help the victory of Orbán and his party, Fidesz, at the national elections in the spring of 2018, without any consideration of what will happen after 2018 when EU funding will be mostly exhausted. Such jerking of the economy is also extremely detrimental to business in general. Furthermore, the rapid disbursement leads to inefficient use of EU money, and greatly increases the risks of corruption. These are just the opposite of the “intended results” of EU funding. Moreover, the use of EU money for party political purposes is not included at all in the “objectives set” by the EU.
According to Article 59 (2) of the Financial Regulation, “When executing tasks relating to the implementation of the budget, Member States shall take all the necessary measures, including legislative, regulatory and administrative measures, to protect the Union’s financial interests…”
It would fill many pages just to list all those documents that prove that, since 2010, the Hungarian government and Parliament have transformed the whole legislative and institutional system in a way which makes it much easier for certain political and business groups to steal/misuse EU funds. Here we would just like to refer to the five resolutions of the European Parliament between 2011 and 2017 on the situation in Hungary. The smothering of civil society organisations, repressions against independent media, and the wide-spread political discrimination also means much less control over the use of public money, including EU funds. We are convinced that to suspend EU funding it is sufficient to know that a member state has taken many “legislative, regulatory and administrative measures” to eliminate the means for protecting the Union’s financial interests.
According to the EU’s Regulation on the European Structural and Investment (ESI) Funds (1303/2013), these funds “provide support, through multi-annual programmes, which complements national, regional and local intervention, to deliver the Union strategy for smart, sustainable and inclusive growth.” Accordingly, money from ESI Funds and other European funds has been used, among other things, to improve education and strengthen civil society organisations. However, by now, the EU funding for these purposes does not complement national support but only counterbalances to a minor extent the destruction caused by the Hungarian government.
It is also clear that many other interventions by the Hungarian government also contradicted the aim of “smart, sustainable and inclusive growth.” For instance, as mentioned above, the legislative and the institutional system has been continuously tailored in a way to make it possible to steal enormous sums of taxpayers’ money. Thus, what the EU funding complemented to a certain extent was the money missing due to these thefts. (Such thefts are well known to the readers of Hungarian Spectrum. Just as examples of the numerous cases, we mention the changing of the regulation governing the trading of gas via pipeline in order to fill the pockets of Viktor Orbán’s friend, the colossal swindle about residency bonds, and the transferring of an incredible amount of public money from the Hungarian Central Bank to private foundations.)
According to the EU’s Regulation on the European code of conduct on partnership in the framework of the European Structural and Investment Funds (240/2014), the governments of the member states must closely cooperate with “bodies representing civil society at national, regional and local levels throughout the whole programme cycle consisting of preparation, implementation, monitoring and evaluation.” They should also “examine the need to make use of technical assistance in order to support the strengthening of the institutional capacity of partners, in particular as regards small local authorities, economic and social partners and non-governmental organisations, in order to help them so that they can effectively participate in the preparation, implementation, monitoring and evaluation of the programmes.” The difficult and ever worsening conditions in which civil society organisations work make it almost impossible for them to be meaningfully involved in these processes, and this further contributes to the improper and inefficient use of EU funds in Hungary.
In the Treaty of Accession to the EU, Hungary declared the following: “Our common wish is to make Europe a continent of democracy, freedom, peace and progress. The Union will remain determined to avoid new dividing lines in Europe and to promote stability and prosperity within and beyond the new borders of the Union. We are looking forward to working together in our joint endeavor to accomplish these goals.” In our understanding, this means that after the accession to the EU, Hungary should have improved its legislative and institutional systems as much as possible in order to achieve these goals; at the very least Hungary should refrain from any backward measures. It should be convincing enough for the European Commission to suspend funding to Hungary that during the last seven years the Hungarian government took a direction which is just the opposite to what it legally committed itself.
There is already widespread discontent in Hungary with the way EU money has been used. This is a further reason for applying the related provisions of EU legislation and suspending EU funding to Hungary until the necessary steps are taken by the Hungarian government to ensure the use of EU funds in accordance with the EU acquis. This is all the more necessary because such funding, in our opinion, is indispensable for the future of the European Union. We fully agree with the author of the article One of the first steps after Brexit must be the reform of the EU budget that “it is absolutely necessary to provide EU funds to the less developed member states with the goal of improving their economic well-being as well as their political stability in order to strengthen the EU as a whole and to make it more competitive globally. But EU taxpayers’ money must be used for this purpose, not against it.”