EU COM Activates Budget Conditionality Over Rule Of Law, Risks EU Funds

European Commission VP for Values and Transparency Vera Jourova tweets: "Today, we send a notification letter to Hungary formally activating the budget conditionality procedure. We identified issues that might be breaching Rule Of Law in Hungary and affect the EU budget. Hungary will have to reply to our concerns and propose remedial measures."

• This is the first time ever that the conditionality mechanism has been utilised by the Commission. It comes at the behest of the European Parliament, which backed a motion calling for the activiation of the mechanism against the gov't of PM Viktor Orban.
• The move is likely to lead to condemnation from ministers in Budapest, which for years has decried the actions of the EU as a liberal bloc seeking to impose draconian rules and stifle Hungarian culture.
• However, Hungary is the second-largest net beneficiary of EU structural and cohesion funding, and therefore would be severely hit should the EU hold back funds on a significant scale.
• Media outlet Balkan Insight states that the witholding of structural funds is unlikely to come in before year-end, but Hungary is still waiting on the EUR7.2bn in grants or the EUR9bn in loans as part of the EU's EUR750bn COVID-19 Recovery and Resilience package.