EU Officials to Discuss Hungary Funds  04/17 06:05

   European Union officials are meeting Friday in Budapest with members of 
Hungarian election winner Pter Magyar's team about pressing issues including a 
massive loan for Ukraine as well as unlocking about 17 billion euros ($20 
billion) of aid for Hungary withheld during the reign of outgoing Prime 
Minister Viktor Orbn.

   BUDAPEST, Hungary (AP) -- European Union officials are meeting Friday in 
Budapest with members of Hungarian election winner Pter Magyar's team about 
pressing issues including a massive loan for Ukraine as well as unlocking about 
17 billion euros ($20 billion) of aid for Hungary withheld during the reign of 
outgoing Prime Minister Viktor Orbn.

   Magyar will take power in May, but the EU is hoping to jump-start talks to 
fast-track cooperation with the new government, said European Commission 
spokesperson Paula Pinho in Brussels on Thursday.

   "The clock is ticking for a number of topics," said Pinho. The "preliminary 
talks" in Budapest before Magyar takes office are to "make sure that once the 
government is in place action can be taken, if appropriate, and that we do not 
waste any time."

   The EU froze the billions in funding to Hungary over concerns of corruption 
and democratic backsliding during Orbn's 16-year rule. But both the EU and 
Hungary's incoming leaders have prioritized releasing them as soon as possible 
to give a much-needed injection of cash into Hungary's ailing economy.

   European Commission President Ursula von der Leyen wrote on X on Tuesday 
that "there is swift work to be done to restore, realign and reform" Hungary's 
policies in order to unblock the funds.

   "Restore the rule of law. Realign with our shared European values. And 
reform, to unlock the opportunities offered by European investments," said the 
EU executive, who herself was often vilified by Orbn during his campaign.

   Magyar, whose party Tisza won a super-majority in parliament which will 
enable deep and quick reforms, has said his government will prioritize policies 
affecting judicial independence, academic and media freedom and anti-corruption 
in order to get access to the money.

   In his first public press conference after winning in a landslide on April 
12, Magyar said Monday that Hungary "is in a very difficult financial 
situation," and that his new government's task will be "to bring home the money 
that is hers."

   He added that, unlike Orbn, he would stick to a deal struck in December to 
provide Ukraine with a much-needed 90-billion-euro loan. Orbn had vetoed the 
bill after initially agreeing to it, enraging EU officials and counterparts 
across the 27-nation bloc.

   Unlocking funds will require economic and government reform

   The funds are split between 10 billion euros of COVID recovery funds and 6.3 
billion euros in the cohesion funds designed to lift up struggling economics 
within the EU.

   Brussels and Budapest are rushing to first unlock the COVID funds because 
they are set to expire in August.

   Hungary, a major net recipient of EU funds, had come under increasing 
criticism for veering away from democratic norms. The Commission had for more 
than a decade accused Orbn of dismantling democratic institutions, taking 
control of the media and infringing on minority rights. Orbn rejected the 
accusations and denounced them as interference in Hungary's sovereignty.

   The Commission suspended the money to Budapest in 2022 over what it said was 
democratic backsliding by Hungary's right-wing populist government and failures 
to tackle corruption and ensure judicial independence. A year later, the 
Commission found that the government had carried out sufficient reforms to have 
around 10.2 billion euros ($12.1 billion) released.

   Magyar can move almost instantly to reform Hungary enough to unlock the 
funds, said Zsolt Darvas, a fellow at the Brussels-based think tank Bruegel.

   "All the legislative work can be done in a single day if there is a will 
from the Tisza party to do it," he said. "That's relatively straight forward 
and not technically difficult."

   That would involve changing how judges are selected and what power they have.

   And Magyar can overcome any setbacks because of the August deadline for the 
COVID funds by following the example of Poland and Portugal where some of the 
funds were put in a national development bank for later dispersal, he said.

   But Darvas said that out of the 16 billion euros, Hungary has already lost 
about 2 billion euros because the funds were suspend for two years -- and 
Hungary has been paying 1 million euros a day since June 13, 2024, on top of a 
200 million-euro fine over Orbn's refusal to align Hungary's asylum processing 
claims with EU standards.

   Again, Darvas said, Hungary could follow Poland's path by staying mostly 
closed to migration but still respecting EU law and thus ending those fines.

   Hungary's economic crisis won't be solved alone by these funds, Darvas said, 
but by complying with EU regulations, the new government will signal that the 
country is a stable place for investments.

   More money is available for the defense industry

   Hungary could also receive mass sums of money if it joins the EU's 150 
billion-euro Security Action for Europe initiative, or SAFE, which is designed 
to boost Europe's defense readiness at a time when the U.S. has been 
diminishing its role in the continent's security.

   So far, 18 of the EU's 27 nations have received low-interest defense loans, 
and Hungary is eligible for 16 billion euros through the program. With the 
other two tranches of cash, these funds would roughly equal 15% of Hungary's 
GDP, according to an analysis by Jeremy Cliffe at the European Council on 
Foreign Relations.