Magyar Signs Hollow €10.4bn Deal

Péter Magyar meets Commission President Ursula von der Leyen in Brussels on 29 May to sign a "political agreement" on unfreezing Hungary's EU funds. The paper has no legal force and releases no money. Magyar is already rejecting some of Brussels' central demands, while an immovable 31 August deadline is closing in.

The gap between ceremony and compliance

Commission officials describe the deal as "primarily a symbolic step". The money at stake is €10.4 billion in recovery funds from the EU's post-pandemic investment programme, the same broad instrument that turned Brussels borrowing into domestic investment across the Union. To receive it, 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.

Behind those milestones sit more than 368 individual reform targets (Reuters). So far, Budapest has received just €919.6 million in upfront cash.

Magyar has drawn his red lines. In a 13 May letter, he said his government "certainly cannot undertake" phasing out windfall taxes on foreign banks and energy companies. These levies have hit Austrian firms hard, with supermarket chain Spar paying roughly €75 million per year. He is resisting pension reform too, arguing that Hungary's budget deficit of 6.8% of GDP makes structural changes impossible before the deadline.

The Commission is responding by lowering the target. Officials have advised Budapest to focus on €6.5 billion in grants and drop the €3.9 billion loan tranche. Under the Commission's own closure guidelines, 31 August is "set in stone": after that date, unspent commitments are permanently lost.

A live court case and a quiet loophole

The European Parliament is suing the Commission in Case C-225/24 for releasing €10.2 billion to Hungary in December 2023, arguing that the judicial reforms used to justify the release 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 ruling could arrive before August and would narrow the Commission's room to release funds on political trust rather than verified reform.

For Malta, this is not an abstract Brussels quarrel. Rule-of-law conditionality is the mechanism by which EU money is tied to courts, procurement and institutional independence. In a country where the public inquiry into Daphne Caruana Galizia's assassination found the state bore responsibility, the distinction between reform promised and reform delivered is not theoretical.

The Parliament's budget committees have said nothing about the agreement being signed on 29 May. The same institution suing over the last fund release is silent on the next one.

Separately, the Commission is exploring whether recovery money can be routed through Hungary's state-owned Exim Bank. Officials acknowledge that this channel "would significantly reduce" the Commission's own oversight of spending. The institution responsible for checking that EU money is spent properly is considering a mechanism that would weaken its ability to do so. The pressure to move money before August is now pushing against the logic that froze it in the first place.

NATO: friendlier tone, thinner commitments

Magyar also meets NATO Secretary General Mark Rutte on the same trip. The shift from Orbán-era obstruction is real: Foreign Minister Anita Orbán pledged that Hungary will stop weaponising its veto.

The operational picture is less convincing. Hungary's defence spending fell from 2.21% to 2.07% of GDP between 2024 and 2025, moving against the Alliance trend. At the B9 summit, a meeting of NATO's eastern flank allies, Hungary refused to co-sign a declaration naming Russia as the primary long-term threat. It chose "constructive abstention", allowing the statement to pass without blocking it while refusing to put Hungary's name to the words (B9 Joint Statement). Budapest maintains that 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 rests on turning pledges into capabilities. A Hungary that offers warmer language while spending less tests whether the Alliance treats tone as a contribution.

What 31 August actually decides

Magyar has shifted Hungary's diplomatic posture faster than many in Brussels expected. The compliance work and the spending plans have not moved at the same speed. The August deadline will show whether the EU's conditionality machinery can tell the difference between a change of leader and a change of policy.