Commission preparing new rules on EU funds distribution based on ‘Lex Hungary'
The EU's 2028-2034 spending plan, scheduled to be published next Wednesday and marking the start of at least a couple of years of laborious negotiations, will extend the link between payments and democratic backsliding, according to a document seen by Politico. Previously, only parts of the €1.2 trillion budget have been linked.
According to the leaked document, the EU executive intends to ensure that all EU funds are subject to conditionality, thereby preventing member states from circumventing EU standards by reallocating funds. While the EU has taken action against Hungary and already withheld some funding the next budget will provide for a streamlined and harmonized conditionality system for all EU funds allocated to member states, according to the document.
The Commission wants to move away from the current system where member states with particular issues could be tempted to shift some investments between programs to avoid being subject to a particular condition, it states.
This would mark a significant departure from the current approach, whereby conditions are only applied to certain elements of the budget. After the publication of the budget proposal, governments will begin negotiations with each other on a final text ― but this is a lengthy process that is not expected to conclude until 2027, the portal said.
'The Conditionality Regulation must be applied to all EU funding,' Finland wrote in its position paper on the new budget, seen by Politico.
But Hungary retorted in its own document that these rules 'allowed for exerting arbitrary political pressure in policy areas unrelated to the protection of the Union's budget.' Slovakia, which has also been criticized over rule-of-law issues, echoed these arguments in its own submission.
Hungary, which has already lost €18 billion in EU funds (€10.5 billion in reconstruction funds and €7.5 billion in cohesion transfers) due to breaches of the rule of law, is set to be hit hardest.
Under the direct link between a breach of the rule of law and the related payment while farmers' subsidies will be untouched by a government's authoritarian drift, a student exchange program might suffer if there have been breaches of academic freedom.
The overall idea is that civil society shouldn't bear the brunt of a leader's misdoings. The Commission wants to keep the money flowing to the recipients of EU funding ― such as NGOs or universities ― regardless of whether a government complies with the rule of law.
The current reform plan is essentially a 'Lex Hungary', given the particularly sharp tensions between Viktor Orbán and the European Commission. The Hungarian Prime Minister has been in conflict with Brussels for years and is facing elections in 2026.
According to an EU diplomat, the Commission is exploiting Orbán's domestic weaknesses ― he is trailing behind his conservative pro-EU rival Péter Magyar and his Tisza Party in the polls ― to propose stricter rules.
With national capitals not expected to vote on the new rules until 2027, there's a chance Orbán might be out of office before the budget is approved.
Commission officials are confident that a Magyar-led government would mend ties with Brussels and implement the EU-required reforms to access blocked funds. They are also preparing for a different scenario, though.
Renew, the European Parliament's liberal group, wants to take this a step further. It supports directly handing the frozen EU funds to civil society, effectively bypassing the central government.
This new system, known as 'smart conditionality,' would mark a change from the current rules, where frozen funds are handed back to the EU's 27 countries collectively after an expiration date.
"We set clear conditions: No EU money for autocrats, but continued support for civil society," Valérie Hayer, the chair of Renew, said on Thursday. 'She [Commission President Ursula von der Leyen] made a commitment. Now it's up to her to keep her word.' However, 'smart conditionality' has been criticised on the grounds that it reduces national governments' incentives to carry out the required reforms. Commissioners are expected to address this issue during emergency budget talks scheduled for the weekend.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Euractiv
6 hours ago
- Euractiv
Hamas hostage videos intensify EU calls for Gaza ceasefire
Videos of emaciated Israeli hostages released by Hamas have ignited outrage in Europe and Israel, intensifying EU calls for a ceasefire and immediate release amid Gaza's deepening humanitarian crisis. EU foreign policy chief Kaja Kallas described the images "appalling" on Sunday in a post on X, condemning the "barbarity of Hamas". She urged the terrorist group to 'release all hostages immediately and unconditionally,' adding that the Hamas 'must disarm and end its rule in Gaza.' Preparedness Commissioner Hadja Lahbib also called for the 'immediate release of all Israeli hostages by Hamas & Islamic Jihad'. The footage, which was partly edited and included images of starving Palestinians, was described by Israeli President Isaac Herzog as "pure cruelty". Herzog called upon world leaders to demand the release of the hostages, with French president Emmanuel Macron echoing his condemnation of the "inhumanity" of the videos. According to Israeli officials, 50 hostages captured by Hamas in October 2023 are still being held in Gaza, at least 20 of whom are believed to be alive. Lahbib also condemned the 'sheer scale of human suffering in Gaza', urging Israel to 'end its starvation of Gaza' and allow large-scale humanitarian aid. Israel rejects accusations from aid agencies and the UN that it is pushing Gaza towards famine, insisting there is 'no starvation' and no restrictions on aid. However, several EU member states – Ireland, Spain, Slovenia, the Netherlands, Luxembourg and more recently Sweden – have pushed to suspend the EU-Israel Association Agreement due to Gaza's deteriorating situation. The Hague also barred two hardline ministers from entering the country, increasing diplomatic pressure on Israel. Other EU countries, including France, Germany, Spain and Belgium, conducted humanitarian aid airlifts earlier this week. According to official Israeli data, the 7 October 2023 Hamas assault claimed 1,219 lives, the majority of them civilians. Israel's military offensive on Gaza since then has killed at least 60,249 Palestinians, according to Gaza's Hamas-run health ministry. The UN consider the ministry's figures reliable. Europe's Gaza offensive The public outcry over Israel's unrelenting approach to Gaza has profound implications for the future of Europe's relationship with the Jewish state. (cs)
Euractiv
2 days ago
- Euractiv
Trump deploys nuclear submarines in row with Russia
US President Donald Trump ordered the deployment of two nuclear submarines on Friday in an extraordinary escalation of what had been an online war of words with a Russian official over Ukraine and tariffs. Trump and Dmitry Medvedev, the deputy chairman of Russia's security council and former president, have been sparring on social media for days. Trump's post on his Truth Social platform abruptly took that spat into the very real – and rarely publicized – sphere of nuclear forces. "Based on the highly provocative statements," Trump said he had "ordered two nuclear submarines to be positioned in the appropriate regions, just in case these foolish and inflammatory statements are more than just that." "Words are very important, and can often lead to unintended consequences, I hope this will not be one of those instances," the 79-year-old Republican president posted. The nuclear sabre rattling came against the backdrop of a deadline set by Trump for the end of next week for Russia to take steps to ending the Ukraine war or face unspecified new sanctions. Despite the pressure from Washington, Russia's onslaught against its pro-Western neighbor continues to unfold at full-bore. Russian attacks have killed hundreds of Ukrainian civilians since June. A combined missile and drone attack on the Ukrainian capital Kyiv early Thursday killed 31 people, including five children, said rescuers. Russian President Vladimir Putin, who has consistently rejected calls for a ceasefire, said on Friday that he wants peace but that his demands for ending his nearly three-and-a-half year invasion were "unchanged". Those demands include that Ukraine abandon territory and end ambitions to join NATO. Insults and nuclear rhetoric Trump did not say in his post whether he meant nuclear-powered or nuclear-armed submarines. He also did not elaborate on the deployment locations, which are kept secret by the US military. The United States and Russia control the vast majority of the world's nuclear weaponry, and Washington keeps nuclear-armed submarines on permanent patrol as part of its so-called nuclear triad of land, sea and air-launched weapons. Trump also did not refer specifically to what Medvedev had said to prompt his order. Medvedev had criticised Trump on his Telegram account Thursday and alluded to the "fabled 'Dead Hand'" – a reference to a highly secret automated system put in place during the Cold War to control the country's nuclear weapons. This came after Trump had lashed out at what he called the "dead economies" of Russia and India. Medvedev had also harshly criticized Trump's threat of new sanctions against Russia over Moscow's continuing invasion of Ukraine. Accusing Trump of "playing the ultimatum game," he posted Monday on X that Trump "should remember" that Russia is a formidable force. Trump responded by calling Medvedev "the failed former President of Russia, who thinks he's still President." Medvedev should "watch his words," Trump posted at midnight in Washington on Wednesday. "He's entering very dangerous territory!" Medvedev is currently deputy chairman of Russia's Security Council and a vocal proponent of Putin's war in Ukraine – and generally antagonistic to relations with the West. He served as president between 2008-2012, effectively acting as a placeholder for Putin, who was able to circumvent constitutional term limits and remain in de facto power. The one-time reformer has rebranded over the years as an avid online troller, touting often extreme versions of official Kremlin nationalist messaging. His influence within the Russian political system remains limited.
Euractiv
2 days ago
- Euractiv
FIREPOWER: Trump sparks NATO surveillance aircraft rethink
Take a free trial of Euractiv Pro to get FIREPOWER in your inbox. Good afternoon and welcome back to Firepower, This week, we look at a very concrete example of how US defence policy impacts European security. A Pentagon rethink of its planned purchase of surveillance aircraft is forcing NATO to reconsider its own options. We also dig into how much SAFE money EU countries are seeking - spoiler alert: more than is available. There's also a debrief on what we know (and don't know) about the EU-US trade deal's implications for the defence sector, and Germany's record €108 billion annual defence budget proposal. Plus, updates on the first EU country to ban arms trade with Israel. Exclusive: NATO taking another look at surveillance aircraft pick NATO is rethinking its choice to buy a fleet of Boeing E-7 surveillance aircraft by 2035 to be the alliance's eyes in the sky in Europe and replace the ageing AWACS, Firepower has learned. That comes after the Pentagon announced plans to cancel US orders for the E-7, citing high production costs and concerns about the jet's future survivability. As a result, a spokesperson for NATO's procurement agency, the NSPA, told Firepower that the plan as 'as a whole is being assessed'. The Pentagon's rejection of the E-7 for the US military raises questions about whether the Trump administration will still agree to contribute financially toward purchasing 14 of the aircraft for NATO – or if the bill will be left to the seven participating European allies . Lower total E-7 orders thanks to American cancellations would also likely drive up the price per aircraft for the remaining customers, including NATO. The NSPA plans to give an update 'towards the end of September' that will 'include the division of cost across the participating nations'. The spokesperson said that NATO and participating countries are 'evaluat[ing] the available options'. Buy local instead? The current scramble to figure out the E-7's future shows just how much Europe's security policy still hinges on political decisions in Washington. It remains unclear at this stage if the remaining NATO countries might be interested in picking a European aircraft instead of the E-7. Saab, which previously pitched its GlobalEye to the military alliance, told Firepower they remained confident their aircraft remains an 'excellent' option. Douglas Barrie, an aerospace analyst at the IISS think tank, told Firepower that other options include sticking with the existing AWACS for now and following the US in their future choice sometime in the mid-2030s, going for a new 'clean-sheet design' or taking a 'wait-and-see' approach, since the potential E-7 cancellation hasn't passed the US Congress yet. On your radar: EU countries want almost €200 billion from SAFE; UK still sidelined This week, 18 EU countries have put in initial requests for SAFE funds by Tuesday's initial soft deadline . Firepower dug into what capitals are asking for, and some initial ideas of how to spend it. According to our sources and estimates, the club of 18 actually asked for a good bit more than the €150 billion total available for loans, when considering the top end of the requests they sent in. Gone are the days where the Commission was not sure they'll spend the whole pot. The Commission put the total requested at € 127 billion on Wednesday. But submissions included a minimum and maximum range, and Euractiv understands that the Commission's figure was based on the low end of their requests. The EU executive is not stopping there, though. It is sending out a letter to nudge the club of countries which have not given in their request to do so fast. The SAFE programme is also making waves across the pond, with EU Defence Commissioner Kubilius telling Firepower that he saw 'strong interest among American industry' during his recent US visit. Canada has reportedly shown interest in participating . However, the process is not that easy, as the UK's efforts to negotiate access demonstrate. The Commission could send a proposal next week to the EU countries as a basis to start negotiations with the UK, but don't expect those to start in peak holiday season, we're told. Israel-EU tensions rise Slovenia became the first EU country to impose a full ban on weapons trade on Israel on Thursday. The ban also prohibits the transit of any weapons through Slovenia on their way between Israel and elsewhere. Meanwhile on the European level, Israel's potential exclusion from key parts of the EU Horizon Europe research fund now hinges in large part on Germany and Italy. Neither have taken a position on the Commission's proposal, which would cut funding to Israel for dual-use technologies that have potential military applications. Israeli state-owned arms maker Rafael notably attracted attention by posting a video on X where a drone killed a person in Gaza. As the EU Observer highlighted , that could cause Israel to get kicked out of the EU programme. Germany, Europe's largest arms exporter to Israel and the buyer of Israeli-made air defence systems, wants more time to consider its position. A decision to back the Commission would move the needle towards a qualified majority – but that's unlikely to come before Foreign Minister Johann Wadephul returns from a visit to Israel later today. A decision on whether to partially exclude Israel from Horizon Europe could be taken later this summer, one diplomat said.
