EU funds 15 February 2023, 10:58am

Hungarian ministers resign from public interest trusts, but Commission expects further steps

Portfolio

Last week, Minister of the Prime Minister's Office Gergely Gulyás announced that the government had decided to withdraw the membership of public interest trusts from ministers and other government members. However, Brussels has not yet received any official information on how the government intends to resolve the situation, which has led to the suspension of the EU's Erasmus and Horizon programmes. Action is needed as this could further delay the disbursement of EU cohesion funds.

The announcement by the Hungarian government that seven of its ministers will resign from board positions on foundation-run universities as of tomorrow, in order to appease EU rule of law concerns, has not yet been officially communicated to Brussels in detail, a European Commission spokesperson told Science Business.

Gergely Gulyás, minister of the Prime Minister's Office in Hungary, announced last Thursday (9 February) that seven senior government ministers would resign from boards of trustees of public trust foundations overseeing 21 of the country’s universities after the EU Council’s December decision to freeze their access to Erasmus+ and Horizon Europe funds. A Hungarian government spokesman confirmed the resignations to Science Business, but did not say whether Brussels had been officially informed or not.

The list of resignees includes Justice Minister Judit Varga and Foreign Affairs Minister Péter Szijjártó. Gulyás, announcing the resignations would apply from 15 February, added that other government officials would also step down from board positions, including state secretaries, deputy state secretaries, state secretaries for public administration, ministerial commissioners and government commissioners.

He also said that the government was willing to consider imposing limits on the length of time that trustees of public foundations could hold office if the European Commission so demanded. Currently, there is no expiry date for appointments.

However, as the details have not yet been formally communicated to Brussels, the EU spokesman said it was not possible to say whether these concessions would be sufficient for the Commission to propose lifting the freezing of funds and the commitment bans. So, for now, only Erasmus and Horizon contracts already signed will certainly apply. As things stand now, universities can apply, but even if they win without the government changing the way the boards of trustees operate, they can no longer sign new agreements with EU organisations.

Ministers leaving will not be enough

As concerns about the transparency and independence of public foundations are only part of the reason why the Commission is proposing action against Hungary to the EU Council, it is not certain that the resignations will be enough to persuade member states to reconsider the freezing of funding. The EU is calling for clarification of the conflict of interest rules, which under EU law are clear: people without political influence can sit on boards of trustees. Academic freedom must also be guaranteed, with appropriate rights vis-à-vis the funders. Similarly, Brussels also expects public procurement procedures for public interest trusts to be more transparent and to be subject to stricter general procedural rules.

So far, the Orbán government has only promised that senior members of the government will resign their membership and that legislative changes will be made. However, they have not yet commented on the other points of contention.

The European University Association, which represents over 800 higher education institutes, said in a statement that concerns over Hungary’s public trust foundations go deeper than just who sits on the boards.

In EUA’s view, the university community should have a formal role in selecting members, there should be a limit on how long they serve, and they should not have “exclusive and irrevocable decision-making rights on core academic issues,” that should rather be accorded to university senates.

Cohesion funds may also be delayed

It is not yet clear what steps the government will take in this regard. Gergely Gulyás himself has strongly criticised the European Commission's moves, even though the EU executive body has been signalling since last autumn, in several official public letters addressed only to the Budapest leadership, that it expects changes in the case of the public interest trusts that control most higher education institutions.

"A significant part of the European Commission's requests are those that have no legal basis in Community law at all,” he said. “The European Commission should only be allowed to formulate demands based on Community law, but we are over that a long time ago.”

As previously reported by Portfolio, the European Commission is reportedly rejecting this position, arguing that EU budget law clearly states that there is a conflict of interest for political decision-makers to decide on the award of grants at government level and on their use at the same time. Likewise, the Brussels position is that the EU's fundamental rights to academic independence and freedom of academic life are clear.

Furthermore, as Science Business notes, it is not clear why he did not aim his response towards the EU Council, which only used Commission suggestions to inform its decision to freeze the funds.

In addition, according to information obtained by Portfolio, the European Commission does not want to separate the two items of the Council's implementing decision, i.e. the issue of foundations and the judicial reforms that are a condition for the disbursement of funds. So, even if an agreement is reached on the latter, which the Commission is also unhappy about, EU funds cannot come without a settlement of the Erasmus issue.

The dispute that led to the funding freeze dates back to 27 April last year, when the EU conditionality procedure was triggered against Hungary over rule of law concerns. In the ensuing negotiations, 17 corrective measures were agreed upon, which Hungary was supposed to implement by 19 November 2022.

In mid-December, it became clear that the EU was not satisfied with Hungary's actions to address rule of law concerns when the EU Council of Ministers published an implementing regulation freezing 55% of cohesion funds for Hungary, or €6.3 billion. The European Commission also proposed to prohibit public foundations in Hungary from accessing Erasmus+ or Horizon Europe funds. However, this prohibition has been dressed up in legal language, and the words "Erasmus" and "Horizon" do not appear anywhere in the implementing regulation.