Hungary's Prime Minister Orban refuses to implement rule of law reforms demanded by the EU. This means that EU aid will now expire. Budapest reacts uncomprehendingly – but is now relying on China.
Hungary has lost its right to EU aid worth around one billion euros due to violations of the rule of law. In order to release the money, the country would have had to implement reform requirements by the end of 2024, a spokeswoman for the European Commission told the dpa news agency.
The forfeited funds are 1.04 billion euros that were intended for Hungary from programs to promote structurally weak areas. The funds were frozen at the end of 2022 because the EU Commission came to the conclusion after analyzes that Hungary was disregarding various EU standards and fundamental values.
Lack of reforms
In order to release the funds, Hungary would have had to implement sufficient reforms by the end of the year. These include, among other things, changes to laws to prevent conflicts of interest and combat corruption. But that didn't happen.
The leadership in Budapest reacted uncomprehendingly to the loss of funds. “The Hungarian government has met all the conditions for accessing EU resources,” Europe Minister Janos Boka wrote on his Facebook page before the turn of the year. “Brussels wants to take away the funds that are due to Hungary and the Hungarian people for political reasons,” he added.
Billion dollar loan from China as Plan B
In order to fill financing gaps, Hungary's right-wing populist Prime Minister Viktor Orban recently relied on China, among other things. In April, Hungary called off a loan worth one billion euros that the country took out from Chinese state banks. This happened discreetly and only became known in July, when the Hungarian Center for Public Debt (AKK) published key data. The loan therefore has a term of three years. The amount of interest and the repayment intervals are not known.
China is very active in Hungary: The electric car manufacturer BYD is building a large factory and the battery cell manufacturer Catl is building a mega-factory. Chinese companies are building the new railway line from Budapest to the Serbian capital Belgrade. For the construction of the Hungarian section, Hungary took out a loan of almost 900 million euros from the Chinese Exim Bank.
Brussels between pressure and compromise
Despite the Chinese financial aid, Orban continues to try to release frozen EU funds. According to previous information from the EU Commission, around 19 billion euros in EU funds were recently blocked for Hungary, including further funding and Corona aid.
At the beginning of December, Orban threatened to veto the EU's next seven-year budget if Brussels did not release the EU funds currently blocked for Hungary. Negotiations on the next long-term EU budget from 2028 to 2035 are expected to begin in mid-2025.
