Hungary’s €4.2bn remains frozen despite reforms

Hungary's frozen EU money is still frozen. On 23 September the European Commission proposed lifting budget sanctions that block €4.2 billion in regional development funds and bar new EU grants to foundation-run universities (Commission announcement). National governments now have to decide whether Hungary has fixed the problem while the university foundations at the centre of the case still exist.

Some headlines called the money "unlocked" (Euronews). That is premature, because nothing moves until governments vote.

Why the money was frozen

The sanctions date from December 2022. The Council, where national governments vote, concluded that EU money in Hungary was exposed to rigged public tenders, weak prosecution of fraud and conflicts of interest (2022 Council decision). It singled out the "public interest trusts", foundations that run many Hungarian universities.

The Council suspended part of Hungary's commitments, meaning EU promises to fund future projects, in three regional programmes. Some of that frozen money has since been lost or moved to other programmes. That is why the sum now at stake is smaller than the original freeze (Portfolio).

A repair with a gap in it

Péter Magyar's government, which replaced Viktor Orbán's, notified the Commission of its fixes on 9 September (Commission statement). Within two weeks the Commission judged them sufficient. It pointed to a stronger anti-corruption watchdog and to Hungary joining the European Public Prosecutor's Office, the EU body that prosecutes crimes against its budget. Ursula von der Leyen, the Commission's president, called the changes important steps for the rule of law (Commission announcement).

The trusts are where the case gets thinner. Hungary has started winding them down but has not finished. Tineke Strik, a Dutch Green member of the European Parliament, welcomed the progress but asked why the Commission treats the budget risks as handled while that phaseout is incomplete. The Commission's own text concedes the gap by describing the risks as addressed pending the trusts' termination (Commission statement). Strik speaks for herself. The Parliament has no vote on this decision.

Who decides, and what stays locked

The Council decides by qualified majority, a weighted vote in which Hungary cannot carry the decision alone and no single government can block it (Council). Governments have until 23 October, one month from the proposal, and can extend that by up to two months in exceptional cases (Conditionality regulation). Officials held technical talks on 24 September and more are scheduled for 1 October, but no ministerial vote is on the calendar (EUobserver). No government has publicly said how it will vote.

A yes would not release everything. The Commission says about €3.5 billion in other regional funds stays blocked under separate conditions on academic freedom, LGBTIQ protection, asylum, poverty and Roma inclusion (Commission briefing). That money follows its own rules, whatever happens to this sanction. Budapest has pressed on several EU funding files this month (To Brief), and they do not all move together.

Students and researchers would feel a Council yes first. Ending the grant ban would let the EU sign new agreements with about 21 affected universities under Erasmus+ and Horizon Europe, its student-exchange and research programmes (EU News). Places and grants would still go through ordinary selection.

The decision in front of governments is specific. The Commission is asking them to lift the sanctions while the trusts' phaseout remains unfinished, and it says the risk is covered in the meantime. The proposal describes new rules and institutions. It does not yet show what evidence the Commission weighed that those rules are working, such as tenders run differently or cases actually brought. Governments have until 23 October to decide whether new laws are enough (Conditionality regulation). The Commission owes them, and Strik, that evidence before they vote.