Hungary Chases €10.4 billion EU Funds

Péter Magyar travels to Brussels this week to sign a political agreement that could unlock up to €10.4 billion in frozen EU funds for Hungary. The Commission is presenting the deal as a reward for democratic renewal after 16 years of Viktor Orbán. The legal problem is sharper: a case now before the EU's top court could find that Brussels cannot release money on the basis of political promises before reforms are actually tested.

For Malta, this is not a distant Hungarian quarrel. It goes to the same question behind every EU rule-of-law mechanism: whether Brussels uses money as leverage only when the politics are convenient, or whether the conditions attached to EU funds mean what they say.

The pattern is already visible. In February 2024, the Commission unfroze funds for Poland after Donald Tusk's election, accepting reform commitments before they had been implemented. Poland has since drawn down 62.4% of its recovery plan, yet none of the promised judicial reforms have entered into force. Hungary is now being offered a similar route.

The Court Case That Could Break the Cycle

In Case C-225/24, the European Parliament is suing the Commission over its December 2023 decision to release €10.2 billion in cohesion funds to Hungary. Cohesion money is the EU's infrastructure and development budget, the same broad category of funding that has shaped roads, public projects and regional investment across smaller member states.

Advocate General Tamara Ćapeta recommended annulment in February 2026, pointing to four specific assessment failures: reforms that had not entered into force, legislation that cut against their stated purpose, and the Commission's failure to verify whether the reforms were being applied in practice.

Ćapeta's strongest point was about who checks the checker. She argued that EU judges should carry out a full review of these decisions, not merely check for obvious errors. If the CJEU, the EU's highest court, follows her reasoning, every future decision to release frozen funds can be tested on its substance. The Commission would have to prove reforms are "in place and being applied," not merely enacted.

The Court has not ruled. The Commission is negotiating a new release while the legality of the previous one is still under challenge.

A Fiscal Trap With a Hard Deadline

Magyar has little room to play with. Hungary's budget deficit reached 3,850 billion forints by end-April, consuming 91% of the annual target in four months. The main cause was around 1,450 billion forints in missing EU revenue. The RRF, the EU's post-COVID Recovery and Resilience Facility, expires for Hungary on 31 August 2026. Money not claimed by then is lost.

Magyar has publicly rejected two central Brussels demands: phasing out windfall taxes on banks and energy companies, and restructuring the pension system. His argument is that Hungary's fiscal crisis makes both politically and financially impossible.

The workaround being discussed is a capital injection into Hungary's state development bank, MFB. Budapest would send EU money through the bank, count it as disbursed before the August deadline, and allow the bank to distribute it over several years. The Commission sent a senior delegation to Budapest in mid-May to examine the plan (Euronews, Portfolio). Its concern is obvious: once the money sits inside a national development bank, Brussels may have less control over how it is spent.

The Guardians Who Stepped Aside

The coalition that once pressed for strict conditions has weakened. Germany's foreign minister now argues for abolishing unanimity voting, rather than making conditionality tougher. Austria's chancellor received Magyar with military honours on 21 May, a gesture of partnership rather than enforcement. Finland's prime minister insisted the rule of law "is not a bargaining chip", but no Finnish blocking move in the Council has followed.

The so-called strict six, Sweden, Austria, Germany, Finland, the Netherlands and Estonia, do not have enough population weight to form a blocking minority under qualified majority voting. Under that system, larger countries carry more weight and no single state can block alone. For the RRF, the Commission decides alone, without a Council vote. The guardians can pressure Brussels, but they cannot veto it.

The 85% Salvage Job

Hungary has disbursed just 9% of its RRF allocation, the lowest rate in the EU. Even optimistic Commission estimates suggest only 80–85% of the total can be rescued before the deadline.

The CJEU ruling in C-225/24 will decide whether the Commission can keep treating a change of government as enough reason to release frozen money before reforms are verified. If the Court follows Ćapeta, withholding EU funds stops being mainly a political tool and becomes a legal obligation, binding every future decision to release or block money.