Magyar signs symbolic deal for €10.4bn

Péter Magyar meets Commission President Ursula von der Leyen in Brussels on May 29 to sign a "political agreement" on unfreezing Hungary's EU funds. The agreement carries no legal force and releases no money. Magyar is already rejecting core Brussels demands, with an immovable August 31 deadline approaching.

The gap between ceremony and compliance

Commission officials describe the deal as "primarily a symbolic step". The real prize is €10.4 billion in recovery funds from the EU's post-pandemic investment programme. Getting that money requires Hungary to clear 27 "super milestones" covering judicial independence, anti-corruption, and public procurement. These conditions were imposed in 2022. Viktor Orbán's government never met them.

Beyond those milestones sit over 368 individual reform targets (Reuters). So far, Budapest has received just €919.6 million in upfront cash.

Magyar has made his red lines explicit. In a May 13 letter, he stated his government "certainly cannot undertake" phasing out windfall taxes on foreign banks and energy companies. These levies hit Austrian firms hard, with supermarket chain Spar paying roughly €75 million per year. He is resisting pension reform too, arguing that Hungary's budget deficit of 6.8% of GDP makes structural changes impossible before the deadline.

In response, the Commission is lowering the bar. Officials have advised Budapest to focus on €6.5 billion in grants and drop the €3.9 billion loan tranche. August 31, after which unspent commitments become permanently lost funds, is per the Commission's own closure guidelines "set in stone".

A live court case and a quiet loophole

The European Parliament is suing the Commission (Case C-225/24) for releasing €10.2 billion to Hungary in December 2023, arguing the judicial reforms that justified the release were insufficient (Verfassungsblog). Advocate General Tamara Ćapeta, whose legal opinion advises the judges before they rule, sided with Parliament in February. She recommended the EU's top court annul the Commission's decision (European Papers). A ruling could arrive before August and would tighten the legal constraints on releasing funds based on political goodwill rather than verified reform.

The Parliament's budget committees have said nothing about the deal being signed today. The same institution suing over the last fund release is silent on the next one.

Separately, the Commission is exploring routing recovery money through Hungary's state-owned Exim Bank. Officials acknowledge this channel "would significantly reduce" the Commission's own oversight of spending. The body responsible for ensuring EU money is spent properly is actively considering a mechanism that weakens its ability to do so. The pressure to move money before August is overriding the institutional logic that froze it.

NATO: friendlier tone, thinner commitments

Magyar also meets NATO Secretary General Mark Rutte on the same trip. The shift from Orbán-era obstruction is real: Foreign Minister Anita Orbán pledged Hungary will stop weaponising its veto.

The operational picture is different. Hungary's defence spending fell from 2.21% to 2.07% of GDP between 2024 and 2025, moving against the Alliance trend. At the B9 summit (a meeting of NATO's eastern flank allies) on May 13, Hungary refused to co-sign a declaration naming Russia the primary long-term threat. It chose "constructive abstention," allowing the statement to pass without blocking it but refusing to put Hungary's name to the words (B9 Joint Statement). Budapest maintains it will send no weapons to Ukraine and will not join the EU's €90 billion joint defence loan.

Rutte's agenda for the July NATO summit in Ankara rests on converting pledges into capabilities. A Hungary that brings friendlier rhetoric but declining spending tests whether the Alliance treats tone as contribution.

What August 31 actually decides

Magyar has moved Hungary's diplomatic posture faster than anyone expected. The compliance and the spending have not moved at the same pace. The August deadline will reveal whether the EU's conditionality machinery can distinguish a change of leader from a change of policy.