Following the update of the European Commission’s assessment (see EUROPE 13081/13), the Council of the European Union reached a deal, on Monday 12 December by a qualified majority of Member States, on the suspension of 6.3 billion euros of EU cohesion policy funds for Hungary, due to continuing concerns about the protection of the EU’s financial interests in that country.
Four issues were politically linked: - the protection of the EU’s financial interests in Hungary; - the Hungarian recovery plan; - EU macrofinancial assistance of 18 billion euros to Ukraine for 2023; - the minimum taxation of multinationals (pillar II OECD agreement). All of them were successfully concluded in a “megadeal”, according to Czech Presidency of the Council.
The decision was taken at the levele of the Member States’ ambassadors to the EU (Coreper), with the Netherlands abstaining on the Hungarian recovery plan. All four texts will be adopted by written procedure, probably on Wednesday.
According to a document seen by EUROPE, the Czech Presidency had presented them with two options on the issue of suspending cohesion funds for Hungary under the ‘Rule of law’ regulation: - the continued suspension of 7.5 billion euros of funds (65% of the total), as the Commission still recommends; - or the recognition of Hungarian efforts to comply with the seventeen measures required to protect the EU’s financial interests in Hungary and thus the setting of a lower percentage of suspended EU funds.
According to the Czech note, there was therefore no question of simply cancelling the procedure formally opened in mid-September by the European Commission.
See the Czech preparatory document: https://aeur.eu/f/4mo
On Monday evening, the Hungarian authorities accepted the 27-country solution for macro-financial assistance to Ukraine, paving the way for a European guarantee based on the EU budget.
If Hungary approves the EU27’s solution for financial assistance to Ukraine, “it could open the way for a more positive debate on revising, somehow, sanctions in (the field of) cohesion policy”, the Czech Minister for European Affairs, Mikuláš Bek, had told a few journalists on Monday afternoon. On the question of a reduction of the suspended funds, he had not ruled out this possibility, but had considered that the reduction would be small, since the Commission confirmed its initial analysis.
On the other hand, if Hungary continues to advocate bilateral aid to Kyiv instead of an EU guarantee based on the EU budget, the position of Member States is likely to be “less inclined” to accommodate the Hungarian authorities, Mr Bek had predicted.
On Saturday 10 December, the Council of the European Union adopted the legal basis paving the way for “a structural solution” for financial assistance to Ukraine for 2023. The guarantees for the European loan will be provided “either by the EU budget or by Member States”, the EU institution said in a statement, with the solution depending on Hungary’s position.
The Member States did not want Hungarian Prime Minister Viktor Orbán to use the ‘emergency brake’ of the ‘Rule of Law’ regulation to put this thorny issue on the agenda of the European Council because of the persistent blockage.
On Monday, he mocked, via Twitter, the European Parliament, which is very combative on the issue of the Rule of law in Hungary, while a scandal of active corruption is shrouding MEPs, parliamentary assistants and members of staff regarding Qatar (see EUROPE 13082/1).
“A solution could be found by Wednesday, maybe tonight”, Mr Bek had said, pointing to “signals” from Budapest in favour of a positive solution before the EU summit. He had noted that Hungary was not the only country to use its veto power in the EU Council, citing the “enlightening” example of recent decisions on the extension of the ‘Schengen’ area of free movement of people (see EUROPE 13080/1). (Original version in French by Mathieu Bion)