EU Commission: dark grey smoke has risen in Brussels today

HUNGARY - In Brief 30 Nov 2022 by Istvan Racz

---

Well, the EU Commission has finally come out with its much-expected proposal on Hungary today, just as scheduled. On balance, it is more negative than positive, but not entirely negative from Hungary's perspective. And at any rate, the Commission did not say anything particularly surprising, especially after the massive leakage of information in recent days, as the Commission has essentially given away almost the whole story through informal channels in advance. Positive: The Commission has approved Hungary's RRF utilisation plan, proposing it for endorsement by Ecofin in the forthcoming days, but certainly before the end of this year. This way, Hungary can avoid losing 70% of its €5.8bn total RRF grant quota forever, because of some basic rule of the RRF instrument. Negative: Not a single eurocent will be paid out, if it is up to the Commission, until Hungary delivers proper implementation of 27 rule-of-law points, including the 17-point list of anti-corruption measures, as set forth in September, plus additional 10 points on judicial reforms and audit and control requirements. This is new: the Commission attached its conditionality only to the 2021-2027 budget back in September. In a way, it is logical to apply the same to the RRF as well, we would say. But the 10 additional points were just newly 'invented'. Negative: The proposed blocking of 65% of three major cohesion policy programs, affecting €7.4bn in total, is maintained. The Commission says Hungary has addressed the majority of demands on the 17-point anti-corruption list, but implementation has been diluted on a few crucially important points. To remove the proposed freeze of funds, the Commission expects fu...