Fidesz holds Hungary’s €16.4 billion key

Péter Magyar and Ursula von der Leyen said on Thursday they had reached a political agreement to release €16.4 billion in frozen EU funds for Hungary. The money has been withheld from Viktor Orbán's government since 2022 over corruption and rule-of-law breaches. For the European Commission, this is a wager that a change of government can justify restarting payments. It comes just as the EU's main weapon against democratic backsliding is under pressure in the courts, in national politics and from its own recent record.

27 Milestones, One Veto Problem

The €16.4 billion is locked behind several legal gates: pandemic recovery funds, cohesion money frozen under the EU's Conditionality Regulation (the 2021 law that lets Brussels suspend payments when rule-of-law failures threaten the EU budget), and a separate tranche blocked over foundations that captured universities and hospitals and placed them outside democratic oversight. The bookkeeping matters. The politics matter more. Any serious release of the money requires Hungary to take apart the institutional system Fidesz built over 14 years.

Hungary has until August 31 to meet 27 "super-milestones". These include joining the European Public Prosecutor's Office (the EU body that investigates cross-border fraud), strengthening the Integrity Authority, criminalising false asset declarations, and beginning to dismantle the public trust system (Infostart). The Commission will check each milestone separately before any money moves. None of the formal steps needed for actual disbursement, including a Council vote on Hungary's revised recovery plan, has happened. For now, this is a political agreement, not a payment order.

The weakness is obvious. Magyar controls only 68 of 199 seats in parliament. Unwinding the public trust system through constitutional change needs a two-thirds majority, so he needs Fidesz votes. The party that built the captured institutions now has a veto over their removal. Magyar can meet some milestones through ordinary laws and executive action, but the reforms Brussels cares about most run straight into Orbán's parliamentary bloc.

The Poland Precedent

Brussels has been here before. In 2024, it released €137 billion for Poland after Donald Tusk's election, accepting promises of reform. Two years on, Poland's Constitutional Tribunal is still paralysed. Neither the Tusk government nor President Duda will publish the other's judicial rulings, and the European Court of Human Rights ruled in May 2026 that Poland's judicial appointment process still breaches fundamental rights. The reforms used to justify the release did not materialise.

EU Parliament Vice-President Katarina Barley called this "the Poland mistake" and argued for step-by-step payments rather than a large release. Hungary's deal follows the same outline: a new government, a quick political agreement, and money unlocked before verified delivery. The difference is that Magyar's numbers in parliament are weaker than Tusk's ever were.

The courts may yet intervene before the August deadline. Advocate General Ćapeta's February 2026 opinion in Case C-225/24 argued that the Commission's earlier partial release of €10.2 billion to Orbán's Hungary should be annulled because compliance cannot be judged on legislative text alone but requires "effective implementation" within the wider constitutional environment (eucrim). The Court of Justice has not ruled. If judgment comes before August 31, it could force a tougher legal test onto the deal the Commission has just presented as a breakthrough.

The Push to Kill the Mechanism

The Hungarian agreement is already changing the politics of conditionality beyond Budapest. The day before the announcement, Italy's Chamber of Deputies passed a resolution calling for the abolition of rule-of-law financial sanctions from the next EU budget cycle starting in 2028. Six northern and Baltic states are pushing in the other direction. A May 14 non-paper from Austria, Germany, the Netherlands, Sweden, Estonia and Finland called for "stronger, more consistent" conditionality enforcement, and proposed making sanctions automatic unless a qualified majority of governments (where larger countries carry more weight and no single state can block alone) votes to lift them.

In Slovakia, the European Parliament's May 20 resolution, passed by 347 votes to 165, called on the Commission to use the same tools against Robert Fico's government. Slovak media have treated Hungary's years of frozen funds less as a model than as a warning of economic stagnation.

The conditionality mechanism now faces three pressures at once: a court ruling that may tighten the standard for releasing money, a European right that wants the instrument removed, and a Polish precedent showing how easily reform promises can outrun delivery. Hungary should have been the clean case for Brussels: a friendly new government, a Commission keen to reward democratic change, and a route back to EU funding. Instead, the August 31 deadline depends on Fidesz voting to dismantle the structures Fidesz created. That is the bet Brussels has chosen to make.