N. Peter Kramer’s Weekly Column
Some EU memberstates seems willing to tackle Hungary less harshly on the rule of law than the European Commission and Parliament. They hope that in return Prime Minister Orban will drop his veto on two crucial dossiers. Hungary blocked the approval of a minimum tax of 15 percent for multinationals, as agreed within the OECD, at the meeting of the 27 EU finance ministers. It also blocked an agreement on an EU loan if 18 billion euros to cover Ukraine’s current expenses in 2023. Hungary is in a strong position because these two dossiers require unanimity.
In order to get Orban to drop the Hungarian veto, Germany, France, Italy and Poland, among others, are willing to be less strict than the Commission on the rule of law in Hungary. The Commission proposed to withhold 13.3 billion euros from EU funds until Hungary implements 27 so called ‘super commitments’. This concerns the corona recovery plan worth 5.8 billion and 7.5 billion in cohesion funds. The group of ‘less strict’ memberstates believe that the Commission was too strict and should take in account the measures that Hungary has taken since November 19, the day that Budapest had to submit its homework. A more moderate report from the Commission could lead to fewer cohesion funds frozen for Hungary. That should convince Orban to drop his veto against the minimum tax for multinationals and/or against the loan for Ukraine.
If the memberstates do not take a decision on the application of the rule of law mechanism before 19 December, the freeze on the 7.5 billion euros will not longer apply. If the Hungarian corona recovery plan is not approved before the end of the year, Budapest will lose 70 percent of the 5.8 billion from the recovery plan. The four measures form a package: either there is an agreement on everything, or on nothing. It looks like a ‘chicken game’!