Hungarian government submits its first anti-corruption bill to avoid losing EU funds

Hungarian Prime Minister Viktor Orban greets the audience during the general session of the Conservative Political Action Conference (CPAC) in Dallas, Texas, U.S., August 4, 2022. REUTERS/Go Nakamura/

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  • The EU executive proposes to withdraw 7.5 billion euros from Hungary
  • Says Hungary’s proposed remedies could work if implemented well
  • Hungary pledges to honor all commitments to unlock EU funds

BUDAPEST, Sept 19 (Reuters) – The Hungarian government submitted the first of several anti-corruption bills to parliament on Monday as Budapest scrambles to avoid losing billions of euros in European Union funding.

The European Union executive on Sunday recommended suspending funds worth 7.5 billion euros ($7.48 billion) over what it sees as Hungary’s failure to fight back. against corruption and to uphold the rule of law. Read more

The European Commission has also established requirements for Hungary to retain access to funding, including new legislation, which Hungary has said it will adhere to.

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Justice Minister Judit Varga said on her Facebook page that she had submitted the first draft law to parliament, as the government “will focus on drafting and implementing commitments (to the EU) in the weeks and months to come.”

“Hungary could enter the year 2023 without losing any EU funds,” Varga said.

The bill amends legislation relating to Hungary’s cooperation with OLAF, the EU’s anti-fraud office, ensuring that OLAF has the support of the Hungarian tax authorities in its investigations into EU-funded projects. EU and accesses data and documents on the spot.

In addition, it modifies the rules governing public wealth management foundations, explicitly obliging them to launch public tenders for projects and tightening the rules on conflict of interest in their management.

Hungary’s case is the first in the EU under a new sanction designed to better protect the rule of law and tackle corruption in the 27-nation bloc.

Nationalist Prime Minister Viktor Orban, in power since 2010, has repeatedly clashed with Brussels over his policy, which he sees as an erosion of democracy in Hungary.

However, with big challenges from rising energy costs and double-digit inflation, a weak forint and a slowing economy, the veteran prime minister seems willing to meet EU demands to finally create institutions that would reduce the risk of corruption in EU-funded projects.

“The latest developments in Brussels certainly come at a bad time for Orban, who is grappling with a series of political and economic problems caused by the two global problems, notably rising energy prices, so he is likely to go further to meet Brussels’ requirements,” said Mujtaba Rahman, managing director Europe at Eurasia Group.

He said Budapest would likely get the current deal, but that would not resolve all outstanding disagreements over other tranches of EU funds.

“The biggest problem for Orban is the money tied up in the Recovery Fund, because the Commission has more leeway to give the go-ahead or not,” Rahman said.

Like most EU countries, Hungary presented its action plan last year on how it would use EU grants to make its economy more environmentally friendly and high-tech after the COVID-19 pandemic. He has yet to receive approval on this as well.

If Budapest does not get the EU funds, the forint – which has fallen 8% this year – will almost certainly fall further, complicating efforts to rein in inflation and exposing Hungarian assets to any negative shifts in global sentiment. Read more

Development Minister Tibor Navracsics, in charge of negotiations with the EU, said on Sunday that Hungary would respect the 17 commitments made to the commission to avoid the loss of all funding.

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Reporting by Krisztina Than, additional reporting by Gabriela Baczynska; edited by Raissa Kasolowsky and Grant McCool

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Laura T. Thrasher