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EU eyes cutting money for Hungary over ‘democracy issues’

The European Union executive recommended on Sunday suspending some EUR 7.5 billion in funding for Hungary over corruption, the first such case in the 27-nation bloc under a new sanction meant to better protect the rule of law.

The EU introduced the new financial sanction two years ago precisely in response to what it says amounts to the undermining of democracy in Poland and Hungary.

“It is about breaches of the rule of law compromising the use and management of EU funds,” Johannes Hahn, EU Commissioner for Budget and Administration, said. “We cannot conclude that the EU budget is sufficiently protected.”

He highlighted alleged systemic irregularities in Hungary’s public procurement laws, insufficient safeguards against conflicts of interest, weaknesses in effective prosecution and shortcomings in other anti-graft measures.

Mr Hahn explained the Commission was recommending the suspension of about a third of cohesion funds envisaged for the country from the bloc’s shared budget for 2021-27 worth a total of EUR 1.1 trillion.

The EUR 7.5 billion in question amounts to 5 percent of the country’s estimated 2022 GDP. EU countries now have up to three months to decide on the proposal.

As the official pointed out, Hungary’s latest promise to address EU criticisms was a significant step in the right direction but must still be translated into new laws and practical actions before the bloc would be reassured.

Viktor Orban’s government proposed creating a new anti-graft agency in recent weeks, at the same time denying that Hungary – an ex-communist country of some 10 million people – is any more corrupt than others in the EU.

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