Hungary: the financial consequences of the rule of law in decline

by Sophie In ‘t Veld, Member of the European Parliament

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In recent years, it has become clear that the Hungarian government lead by Prime Minister Orbán does not care much about respecting European values ​​such as the rule of law and democracy. Local NGOs are systematically oppressed if they are committed to work on human rights issues or if they dare to criticize the government. The Central European University, a place of academic freedom and critical thinking, is threatened with closure. The rights of migrants, asylum seekers and minorities are being constantly violated. Press freedom is under considerable pressure. The independence of the judiciary is being further eroded. I have demanded attention for these matters in the European Parliament on several occasions and I will continue to do so.

Topics we hear much less about however are the fraud, corruption and mismanagement of taxpayers money. Hungary receives a lot of money from the EU, over 50% of public investment comes from direct EU subsidies. At the same time, it is also the Member State with the highest number of irregularities detected in the spending of EU subsidies. A recent report from the European Parliament shows that Hungary violates public procurement rules, does not use EU subsidies in a transparent manner, and that corruption is a problem. There are several investigations under way by the EU anti-fraud agency OLAF. In the media, reports continue to appear about the dubious contacts between members of the Orbán government, rich oligarchs and offshore funds. The government uses tax money to launch large anti-European and xenophobic media campaigns. In addition, the Hungarian Central Bank is violating the European Treaty by directly financing foundations and institutes close to the government.

Make no mistake, these things go hand in hand: the above-mentioned financial malpractices show the lack of respect for the rule of law as well. The Hungarian government cares just as little about the fundamental rights of its citizens as it does about the orderly and proper spending of the country’s public funds.

In order to denounce this, I have sent written questions to the European Commission, I wrote to Mario Draghi, the President of the European Central Bank to clarify the illegal financing constructions used by the Hungarian Central Bank, and I continue my quest for clear answers. What urgent action will the Commission take to safeguard the financial interest of the EU in Hungary? How does the Commission ensure to effectively address corruption in Hungary in the context of the European Semester? Is there evidence that practices of the Hungarian Central Bank violate Article 123 of the TFEU? And if so, will infringement proceedings be promptly started? If EU institutions cannot provide answers to these basic questions who can we trust to protect our common financial interest?

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