On Monday 26 January, MEPs from the European Parliament’s Committees on Budgets (BUDG) and Budgetary Control (CONT) questioned the European Commission on the application of the Conditionality Regulation based on the rule of law, particularly with regard to Hungary.
The hearing, which was attended by the European Commission’s Executive Vice-President for Cohesion and Reforms, Raffaele Fitto, and the Commissioner for Budget and Anti-Fraud, Piotr Serafin, focused on the ongoing freezing of a significant proportion of European funds earmarked for Hungary and the fears, expressed by several MEPs, of a circumvention of the rules through the mid-term review of cohesion programmes or new EU financial mechanisms.
The Commission rejected any idea of indirect release.
Raffaele Fitto pointed out that the Common Provisions Regulation sets out horizontal and thematic conditions, including compliance with the Charter of Fundamental Rights.
In the case of Hungary, the Commission considered that this condition had still not been met in a number of key areas, including academic freedom, fundamental rights and asylum. While some of the funds were released in late 2023 (see EUROPE 13313/9), after reforms on the independence of the judiciary were deemed sufficient, large sums remain frozen to date.
According to the Commission, almost €7.6 billion currently remain blocked due to non-compliance with horizontal conditions, application of the Rule of Law Conditionality Regulation and non-compliance with certain thematic conditions. In addition, there is an annual decommitment mechanism that results in the permanent loss of around €1 billion a year until the situation is rectified.
Asked by Jean-Marc Germain (S&D, French) about the mid-term review of cohesion programmes and the transfer of Hungarian funds to STEP (Strategic Technologies for Europe Platform), Raffaele Fitto said that these amounts would remain blocked until the legal conditions had been met.
The Commission considered that the proposed new priorities presented a risk of non-compliance with the Charter of Fundamental Rights and consequently suspended their financial implementation.
Piotr Serafin returned to the subject of the Conditionality Regulation adopted by the Council in 2022, pointing out that its purpose is to protect the EU budget from repeated dysfunction in areas such as public procurement, conflicts of interest and the fight against corruption.
He therefore argued that, in the absence of corrective measures deemed sufficient by the Commission and the Council, the financial sanctions remained in full force. He also confirmed that this framework applied to all EU budgetary instruments.
Finally, the Commission assured that it is closely monitoring developments in other Member States, notably Slovakia. It also pointed out that any activation of the conditionality mechanism is based on a rigorous legal assessment and on compliance with the procedures laid down in the Treaties. (Original version in French by Nithya Paquiry)