Fidesz holds key to Hungary’s €16.4 billion

Péter Magyar and Ursula von der Leyen said on Thursday they had reached a political agreement to unblock €16.4 billion in frozen EU funds for Hungary, money held back from Viktor Orbán’s government since 2022 over corruption and rule-of-law breaches. For Malta, where rule-of-law oversight is not an abstract Brussels phrase after Daphne Caruana Galizia’s assassination and the public inquiry that found the state bore responsibility, the question is familiar: what happens when European law meets captured institutions at home?

The Commission is making its strongest bet so far that a change of government is enough to justify restarting payments. It is doing so while the EU’s main financial weapon against democratic backsliding is under pressure in court, in national politics, and from its own recent precedent.

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 (a 2021 law allowing Brussels to 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 accounting is less important than the mechanism. To release the money, Hungary has to undo parts of the institutional system Fidesz built over 14 years.

Hungary must meet 27 "super-milestones" by August 31. These include joining the European Public Prosecutor’s Office, the EU body that investigates cross-border fraud; strengthening Hungary’s Integrity Authority; criminalising false asset declarations; and beginning to dismantle the public trust system (Infostart). The Commission must verify each milestone before money moves. None of the formal steps needed for 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 in the parliamentary numbers. Magyar has only 68 of 199 seats. Rewriting the constitution to unwind the public trust system needs a two-thirds majority, which means he needs Fidesz votes. The party that created the captured structures now has a veto over dismantling them. Magyar can deliver some reforms through ordinary laws and executive action, but the institutional changes Brussels wants most run directly into Orbán’s bloc.

The Poland Precedent

Brussels has seen this pattern before. In 2024, it released €137 billion for Poland after Donald Tusk’s election, accepting promises of judicial reform. Two years later, Poland’s Constitutional Tribunal remains paralysed. Neither the Tusk government nor President Duda will publish the other side’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 were not implemented.

European Parliament Vice-President Katarina Barley called this "the Poland mistake" and argued for step-by-step payments instead of a bulk release. Hungary’s deal follows the same route: new government, fast political agreement, money unlocked before delivery is verified. The difference is that Magyar’s parliamentary position is weaker than Tusk’s ever was.

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 from legislative text alone but requires "effective implementation" within the broader constitutional setting (eucrim). The Court of Justice has not ruled. If it does so before August 31, it could impose a tougher legal test on the deal the Commission has just presented as a breakthrough.

The Push to Kill the Mechanism

The agreement is already reshaping conditionality politics beyond Budapest. One 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 opposite direction. A May 14 non-paper from Austria, Germany, the Netherlands, Sweden, Estonia, and Finland demanded "stronger, more consistent" conditionality enforcement and proposed making sanctions automatic unless a qualified majority of governments, where larger states carry more weight and no single country 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 are treating Hungary’s years of frozen funds not as a model for resistance, but as a warning of economic stagnation.

The conditionality mechanism now faces three tests at once: a court ruling that may raise the standard for releasing money, a European right that wants the tool scrapped, and a Polish precedent showing how easily promises can replace delivery. Hungary should have been the clean case for Brussels: a friendly new government and a Commission ready to reward democratic change. Instead, the August 31 deadline depends on Fidesz voting to take apart the system Fidesz built. That is the gamble Brussels has chosen.