EU funds could bolster Orban’s grip on power

Zsuzsanna Szelenyi, The Independent

Viktor Orban met European Commission president Ursula von der Leyen in Brussels on Friday. A clue to this meeting’s significance is the fact that it came at the request of Orban – which only happens if something is really important to him.

Since the Hungarian and Polish governments’ threat last autumn to veto the Reconstruction and Recovery Fund (RRF) – set up to help repair the economic and social damage caused by the coronavirus pandemic – money has become a neuralgic point between the EU and the Hungarian prime minister.

The two leaders discussed Orban’s plans to spend the 7 billion euros in non-refundable grants and the additional 10 billion euro loan that Hungary will receive from the RRF in the next three years. The RRF grant is for Hungary, as for other governments, manna from heaven. It comes on top of the regular EU transfers, it is easier and more flexible to use, and a significant part is paid in advance.

Hungary’s government desperately wants the first instalment of the grant by summer 2021, ahead of parliamentary elections in spring 2022. For the first time since Orban gained an absolute majority in 2010, the opposition is working together to challenge him. Finally, the Fidesz party could lose power.

The funds are supposed to be used to strengthen the EU’s economic and social cohesion, mitigate the impact of the pandemic, and support the green and digital transition. But with such high stakes, these heavenly euros are likely to be used by Orban to further cement his power. Tellingly, he recently reorganised government portfolios to pull the agency responsible for planning and distributing EU funds into the prime minister’s office.

The problem Orban faced in discussions with von der Leyen is that Hungary’s national plan does not, in fact, meet the requirements of the Commission. First, Orban will need evidence to back his claim that the required 37 per cent of the funds will be spent on green transition and 20 per cent on digital transformation. Moreover, Hungary under its present government fails the Commission’s standards regarding the independence of the justice system, anti-corruption measures and the transparency of public procurements.

And finally, the big issue. Just 15 months before the next election, Orban’s government has radically transformed some of the country’s major institutions including universities, putting them under the control of Fidesz-led asset management foundations. So far, 32 such foundations have been established (with the threat of many more), whose boards are filled with senior Fidesz politicians, a structure that can only be changed in the future via a parliamentary supermajority.

Hundreds of billions of euros, a visible part of the state’s asset in starter capital, have already been handed to these political appointees to operate as non-profit institutions in the future.

In the national plan Orban presented to von der Leyen approximately 20 per cent of the RRF funds are assigned to the “modernisation of universities”, which will go to these Fidesz controlled management foundations. There is no concrete news on how the meeting went and whether von der Leyen and Orban clashed at the meeting. They are not interested in a public fall-out. It’s in both of their interests to launch the RRF as soon as possible. Von der Leyen probably required the Hungarian government to provide legal guarantees for more transparent public procurement and stronger state control over public foundations. But will she get it?

Orban is keeping the Commission under pressure by delaying the Hungarian parliament from approving the new financing mechanism for the Fund. This is a deliberate tactic – under Fidesz’s supermajority, such approval could be made at a time of Orban’s choosing. Orban wants to maintain his leverage until his financial plan is accepted in Brussels.

Is the Commission willing to yet again give Orban a free pass as his government uses EU funds for his own political purposes? While Europe is overwhelmed from the fall-out of the pandemic, the union must not forget longer-term interests. The EU can’t afford to finance the repeated victory of a political party openly undermining its foundations