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Hungary has proposed extensive judicial reforms in a bid to unblock €7.2 billion in grants from the EU’s post-pandemic recovery fund, according to documents seen by POLITICO.
The overture is the latest twist in a months-long standoff between Brussels and Budapest over the money, which Hungary increasingly needs as the economic situation deteriorates at home. The two sides have been seeking a compromise that would see Hungary commit to strengthening the independence of its judiciary system in exchange for Brussels’ approval of its pandemic recovery plan and related funds.
Budapest has to secure approval from both the European Commission and a majority of EU countries before the end of the year or risk losing up to 70 percent of the grants.
The Commission is likely to make a decision on the matter before the end of the month, EU officials and diplomats told POLITICO. EU commissioners may discuss the issue in a meeting either next week or the week after, one official added. If that happens, EU finance ministers would then vote on the matter on December 6.
Unblocking the funds could convince Budapest to drop its veto on other key decisions, including an international minimum tax deal and an €18 billion Ukrainian aid package.
But even a conditional approval to give Hungary the money would likely spark a backlash from the European Parliament, countries like the Netherlands that want the EU to crack down harder on rule-of-law threats, and civil society groups that argue Budapest’s promises can’t be taken at face value.
A Commission spokesperson declined to answer questions about Hungary’s latest offer or the timing of a possible deal.
“We have made progress on a number of issues over the past months,” the spokesperson said. “Discussions with Hungary continue and we are working to conclude our assessment as fast as possible.”
The art of the deal
Budapest and Brussels have been negotiating over the EU funds for a year and a half, tussling mostly over Hungary’s anti-corruption efforts — or the lack thereof.
The dispute has featured a two-track negotiation.
One path is the discussion over Hungary’s access to post-pandemic cash.
The other has been an ongoing squabble over the country’s access to regular EU funds — a fight that erupted after the EU triggered a mechanism giving it the power to withhold countries’ money over rule-of-law concerns.
In September, the Commission took the dramatic step of suggesting the EU suspend about €7.5 billion of Hungary’s regular budget payouts. But officials also gave the country a path to compromise, essentially saying that if Budapest enacted 17 rule-of-law commitments it had made, it could get the money. Hungary now must adopt those commitments by November 19 or risk losing the funds.
The Commission then also sought additional commitments from Budapest on judicial independence through the pandemic fund negotiations, counting on Orbán’s desire to secure nearly €15 billion in suspended EU cash, equivalent to nearly 11 percent of the country’s GDP in 2021.
Inflation in Hungary exceeded 20 percent in September and the government forecasts only 1 percent growth in 2023, putting pressure on the country’s finances.
What’s in the proposal?
The Hungarian government’s judicial reform commitments, according to a draft dated November 4 and seen by POLITICO, revolve in large part around strengthening the National Judicial Council, a supervisory body currently unable to exercise effective oversight, according to the Council of Europe, a human rights institution.
Budapest said it will give the council the power to issue binding opinions on a range of decisions made by the president of the National Office for the Judiciary, a politically appointed role. The newly strengthened body would thus be able to revise the appointment of judges and court leaders, transfer and remove judges without their consent, and weigh in on the suitability of candidates for the National Office for the Judiciary.
Additionally, Budapest vowed to ensure the body’s operational independence and equip it with an appropriate budget, as well as consult with it on legislative proposals related to the judiciary. The council could also make legislative proposals to the government.
The government further committed to reform the Kúria, Hungary’s supreme court, with the goal of enshrining its independence. In particular, Budapest proposed giving the newly strengthened oversight body a say on the suitability of the government’s supreme court nominations.
The government also listed a number of safeguards meant to ensure the court acts independently and in accordance with the law. Notably, it pledged to remove legal hurdles for judges wishing to make a referral to the Court of Justice of the European Union — a long-standing point of contention.
Finally, the government said it will strip government bodies of their ability to challenge final rulings from the country’s Constitutional Court.
The government also committed to consulting with civil society groups on the proposed reforms.
All the proposed reforms would need to enter into force by the first quarter of next year and would be completed by a set date, still to be determined, according to the document.
And, notably, the draft said the reforms would need to be completed before Hungary made any payment requests to the Commission.
Source: Politico
