Hungarian model-changed universities remain outside of the Erasmus and Horizon programmes

As Portfolio reported earlier, the European Commission concluded in its decision on Monday that Hungary's latest amendment to the law, submitted on 2 December 2024, does not sufficiently address the conflict of interest risks in the boards of trustees of public interest trusts.

The Hungarian legislation set a six-year term of office for trustees, banned members of parliament, mayors and other heads of public administration and public authorities from foundation boards, and introduced a one-year cooling-off period before the relevant actors could be appointed to the boards.

However, the Commission's analysis of the situation has led it to conclude that the continuance of the previous measures on the operation of foundations is justified.

In its assessment to the government, the EU executive has also clearly set out what further changes would be needed to solve the problems so that the model-changed Hungarian universities and research institutions can return to the Erasmus and Horizon programmes.

The background to the case is that the Council adopted measures to protect the EU budget in December 2022, because of breaches of the rule of law in Hungary. Since then, the Hungarian government has taken several steps to resolve the situation, most recently with the above-mentioned amendment to the law, which was supposed to lift EU sanctions.

However, in the Commission's view, the proposed changes have not proved sufficient and further adjustments to the rules are needed to fully restore the funds.

Portfolio has learned from Brussels officials that they saw several problems, but there were three main problems with the legislation, to which they were kind enough to provide some insight:

• as we had previously known, the Hungarian law adopted in the autumn distinguished between institutions for which it was considered applicable in an annex, and it was indicated that only actors receiving EU funds were subject to conflict of interest rules. However, the European Commission wanted a universal law that was "structurally and unchanged valid". Sources said they were concerned that if a decision was taken to change models for a new university, it would not in principle be bound by the rules of the law.
• According to our information, they also objected to the fact that, although the members of the board of trustees of public interest trusts are required to make a declaration of assets, the compliance of which should be verified by the Integrity Authority, this task was not included in the law governing the operation of the office.
• They also consider it inappropriate that the new law on public interest trusts cannot be applied universally to the whole higher education sector.

We have not been told to what extent the Commission has backed down from its previously known objections to the maximum term of the Board of Trustees being four years, or to the two-year cooling-off period between public office and board membership. Sources declined to provide more details on their other objections.

In response to our question that the government has repeatedly claimed that the European Commission did not explain in previous consultations what conflict of interest rules they expect, they strongly denied that they had not given any information. As EU officials have previously told Portfolio, there were formal and informal discussions between the parties before the law was adopted. Our sources in Brussels said that

they had made their concerns clear before the legislation was passed, yet the parliament passed a law almost identical to the draft they had originally seen on almost all points.

The European Commission has not now examined whether Hungary has remedied the problems in the conditionality procedure: the aforementioned December 2022 Council decision, in addition to suspending the Erasmus and Horizon programmes, also blocked €12.2 billion in cohesion funding,

of which €1.1 billion could be lost by the end of the year.

The new common EU budget includes the n+2 rule, which requires suspended EU financial instruments to address rule of law concerns within two years. Here, the cabinet has not yet delivered on several transparency and anti-corruption measures.

Cover photo (for illustration purposes only): Getty Images