Hungary’s EU fund dilemma puts Brussels in legal, political tightrope

Hungary’s incoming leadership under Péter Magyar is moving quickly to secure access to roughly €17 billion in frozen EU funds, a demand that comes as Brussels faces a legally complex and politically sensitive decision over whether and how to release the money.

According to an analysis by Euractiv, Magyar has signaled urgency ahead of his meeting with European Commission President Ursula von der Leyen, stating: “We have no time to waste.” The funds, equivalent to nearly 10% of Hungary’s GDP, are central to stabilising the country’s economy and were previously suspended under rule-of-law conditionality mechanisms.

However, Euractiv highlights that the EU’s sanctions framework is deliberately structured to be difficult to reverse.

“There is no easy exit route for a member state to lift the sanctions,” said Jacob Öberg, an EU law professor at the University of Southern Denmark.

“A member state still needs to comply with the conditions that have been imposed,” he added.

The analysis notes that the €17 billion is split across two major instruments: around €10 billion from the post-pandemic recovery fund and approximately €7 billion from cohesion funds. As Eulalia Rubio, a researcher for Jacques Delors Institute and CEPS, explained: “We have a lot of fragmentation. There are three instruments rather than a single sanction tool, each comes with different logic, procedures and legal constraints.”

Euractiv emphasises that the recovery fund component is particularly time-sensitive, with Hungary at risk of losing around €10 billion if it fails to meet Commission conditions by August. While 17 of 27 benchmarks are reportedly met, remaining requirements focus on judicial independence and anti-corruption safeguards.

The piece also highlights legal uncertainty reinforced by recent developments at the European Court of Justice. An advocate general reportedly recommended annulling a 2023 Commission decision to release €10 billion, arguing reforms were incomplete, underscoring the limits of political discretion.

As Rubio notes: “According to many legal experts, the measures in Poland were not sufficient and it also coincided with the veto over aid to Ukraine, so there was political bargaining at stake in releasing the funds.”

Öberg similarly stresses constraints on the Commission’s flexibility: “The Commission has room to maneuver. It could propose to release the funds if it can explain why the budget is not at risk. Political commitments alone would not be enough without evidence of action.”

The situation places both sides under pressure: Magyar must deliver credible domestic reforms, while the Commission must balance legal compliance with political implications of either withholding or releasing funds.

As the analysis frames it, the core tension remains unresolved: Hungary’s access to the funds depends not only on political will, but on a rigid legal framework that limits discretionary compromise—leaving the outcome uncertain even amid shifting political leadership in Budapest.

By Sabina Mammadli