Magyar’s €10.4bn Deal Has No Force

Péter Magyar is due in Brussels on May 29 to sign a "political agreement" with Commission President Ursula von der Leyen on releasing Hungary’s frozen EU money. The paper will look useful in photographs. It will not, by itself, release a cent.

The gap between ceremony and compliance

Commission officials are describing the agreement as "primarily a symbolic step". The money at stake is €10.4 billion from the EU’s post-pandemic recovery fund, the investment programme set up to help member states rebuild after Covid. To draw it down, Hungary must clear 27 "super milestones" on judicial independence, anti-corruption and public procurement. These conditions were imposed in 2022. Viktor Orbán’s government never met them.

Those milestones are only the front door. Behind them sit more than 368 individual reform targets (Reuters). Budapest has so far received just €919.6 million in upfront cash.

Magyar has already marked out what he will not do. In a May 13 letter, he said his government "certainly cannot undertake" to phase out windfall taxes on foreign banks and energy companies. The levies have landed heavily on Austrian firms, with the supermarket chain Spar paying roughly €75 million per year. He is also pushing back on pension reform, arguing that Hungary’s budget deficit of 6.8% of GDP leaves no room for structural changes before the deadline.

The Commission’s response has been to narrow the ask. Officials have advised Budapest to concentrate on €6.5 billion in grants and leave aside the €3.9 billion loan tranche. The problem is time. August 31 is the closing date after which unspent commitments are lost permanently, and the Commission’s own closure guidelines say it is "set in stone".

A live court case and a quiet loophole

The European Parliament is already suing the Commission over Hungary. In Case C-225/24, it argues that the Commission was wrong to release €10.2 billion to Budapest in December 2023 because the judicial reforms used to justify the move were not enough (Verfassungsblog). Advocate General Tamara Ćapeta, whose opinion guides the judges before they rule, sided with Parliament in February. She recommended that the EU’s top court annul the Commission’s decision (European Papers).

A judgment could arrive before August. If it does, it may tighten the legal space for releasing funds on the strength of political goodwill rather than verified reform.

The Parliament’s budget committees have said nothing about the agreement being signed in Brussels. The same institution challenging the last Hungarian fund release is quiet about the next one.

At the same time, the Commission is examining whether recovery money could be routed through Hungary’s state-owned Exim Bank. Officials accept that this channel "would significantly reduce" the Commission’s own oversight of spending. The institution charged with protecting EU money is considering a mechanism that would make that job harder. The August deadline is beginning to bend the logic that froze the funds in the first place.

NATO: friendlier tone, thinner commitments

Magyar’s Brussels trip also includes a meeting with NATO Secretary General Mark Rutte. The change in tone from the Orbán years is real. Foreign Minister Anita Orbán has pledged that Hungary will stop weaponising its veto.

The practical picture is less tidy. Hungary’s defence spending fell from 2.21% to 2.07% of GDP between 2024 and 2025, moving against the wider Alliance trend. At the B9 summit, the May 13 meeting of NATO’s eastern flank allies, Hungary refused to co-sign a declaration naming Russia as the primary long-term threat. It used "constructive abstention", allowing the statement to pass while keeping Hungary’s name off the words (B9 Joint Statement).

Budapest still says 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 depends on turning pledges into capabilities. Hungary is offering a friendlier voice, but with lower spending. That leaves NATO to decide how much tone counts when the balance sheet points the other way.

What August 31 actually decides

Magyar has changed Hungary’s diplomatic posture with striking speed. Compliance has moved more slowly. So has the spending.

The August deadline will show whether the EU’s conditionality system can tell the difference between a new leader and a new policy.