EU funds 11 December 2023, 2:12pm

Seven Member States voted to withhold EU funds for Hungary

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Up until today we have known only that four EU Member States did not vote in favour of the Hungarian RePowerEU plan in the Council of the European Union last week, but Finance Minister Mihály Varga has now announced that Sweden, Denmark and Finland also did not endorse the approval of an additional €4.6 billion in funding for Hungary, of which the government can receive €0.9 billion as pre-payment. This is a warning sign for the subsequent vote on the Recovery and Resilience Facility (RRF).

Following a proposal from the European Commission, EU finance ministers decided on Friday (8 Dec) to adopt implementing decisions approving Hungary's amended recovery and resilience plan (RRP), along with the revised RRPs of 12 other countries, including a RePowerEU chapter. The Orbán government will thus be able to quickly access the first pre-payments of 10+10%, amounting to €920 million next year, without having to meet the super milestones, a condition to access the entire RRF.

The EU regulation does not set any conditions for the pre-payment, but Hungary must continue to meet rule of law and anti-corruption requirements for the additional funds to be made available.

Last Friday's decision did not require unanimity, only a qualified majority vote. As local daily Népszava reported on Friday, the Netherlands and the three Baltic states abstained. All of them considered it undesirable for Hungary to receive an advance from the funds for the energy transition because of the lack of rule of law reforms and the absence of corruption measures.

Now, however, the information provided by Finance Minister Mihály Varga reveals that the trio of finland, denmark and sweden, in addition to the four countries, did not support the release of the pre-payemnt for hungary, either.

"These countries are doing everything they can to withhold the aid we and Poland are rightfully entitled to. Nor are they interested in the green transition or in reducing energy dependence. Even the European Commission, which is critical of us, gave the Hungarian recovery programme an excellent rating, but they did not care," Varga posted on his Facebook page.

Technically, this is an interesting situation: in qualified majority voting in the Council, abstentions count as votes against, meaning that the seven countries in question have effectively voted against the amendment of the Hungarian recovery plan.

In addition, it was not so certain that funds would start to be transferred, because the rule is also that 55% of Member States (in practice 15 out of 27) or as many as represent at least 65% of the total EU population must endorse the decision. This could be a warning sign for the RRF vote, once the Hungarian government meets the super milestones, as the seven opponents could be joined by other countries in the future.

Cover photo: Hungarian Finance Minister Mihály Varga at an Ecofin meeting in Brussels on 8 December 2023. Source: EU