In a first, European Union moves to cut money from Hungary over undermining democracy

The European Union executive on Sunday recommended suspending nearly 7.5 billion euros in funding to Hungary for corruption, the first case under a new sanction aimed at better protecting the rule of law in the 27-nation bloc.

The European Union imposed the new financial sanctions two years ago on the grounds that Prime Minister Viktor Orban had undermined democracy in Poland and Hungary during his more than a decade in power, cracking down on the courts, media, NGOs and academia, and restricting the rights of migrants, gays and women. "This is about rule of law violations that jeopardize the use and management of EU funds," said EU Budget Commissioner Johannes Hahn. "We cannot conclude that the EU budget is adequately protected." Hahn highlighted systemic irregularities in Hungary's public procurement laws, inadequate safeguards against conflicts of interest, weaknesses in effective prosecution and shortcomings in other anti-corruption measures. Hahn said the Commission has recommended the suspension of around a third of the cohesion funds for Hungary from the bloc's common budget for 2021-27, totaling €1.1 trillion. The €7.5 billion corresponds to 5% of the country's estimated GDP for 2022. EU countries have up to three months to decide on the proposal. Hungary's recent pledge to address the EU's criticism is an important step in the right direction but needs to be translated into new laws and practical actions to reassure the bloc, Hahn said. CORRUPTION Orban's government has in recent weeks proposed setting up a new anti-corruption agency as Budapest comes under pressure to fund the struggling economy and the forint, the worst-performing currency in the eastern EU. Orban, who describes himself as a "freedom fighter" against the liberal Western worldview, denies that Hungary, a former communist country of about 10 million people, is more corrupt than any other country in the EU. The Commission is already blocking around €6 billion in funding for Hungary under a separate COVID economic recovery incentive due to the same corruption concerns. In 2018, Reuters documented how Orban funneled EU development funds to friends and family, a practice that human rights groups say has enormously enriched Orban's inner circle and allowed the 59-year-old to consolidate his power. According to OLAF, the bloc's anti-fraud agency, between 2015 and 2019, Hungary irregularly spent around 4% of EU funds, by far the worst result among the 27 EU countries. Orban has also angered many in the bloc by maintaining close ties with President Vladimir Putin and threatening to impose sanctions on Russia for waging war against Ukraine and rejecting the EU unity needed to maintain it. Follow Global Economic Developments on Social Media! Click here to follow Ieconomy official Facebook account! Click here to follow Ieconomy official Instagram account! Click here to follow Ieconomy official Twitter account!