Another warning from the EU Commission

HUNGARY - In Brief 20 Jul 2023 by Istvan Racz

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It is always difficult to tell what causes any particular move by currency exchange rates. But as regards the forint's most recent weakening against both EUR and USD over the last two days, it can be rather safely said that a new warning from the EU's budget commissioner Johannes Hahn played some role. Mr. Hahn essentially commented on Hungary's access - or more accurately the lack of it - to the EU's Erasmus and Horizon grant programs (the first one for university students, the second for university professors, with some simplification). The issue is Hungary's 21 universities that were transferred not long ago from public ownership into so-called public interest trusts, a mixed category between public and private ownership. The EU’s problem is that these trusts are not independent from the government. They say the regulation of how the managers of trusts are chosen is not clear and proper: essentially appointments can be decided simply by PM Orbán. In Europe, an educational institution that is not independent does not count as a university; as a consequence, the institutions in question have been excluded by the EU from the Erasmus and Horizon programs, and altogether €2bn of grants out of new cohesion policy funds have got blocked specifically on this account. The government has claimed that there is still time to reach agreement on the subject as grants for the next two semesters are secured. But the EU Commission, including Mr. Hahn now have confirmed that the affected universities may fall out of these programs already from September if no extremely rapid progress is reached towards an agreement. Mr. Hahn recently added that a new government proposal for the solut...