Hungary loses a billion euros in EU aid due to unfulfilled reforms, Orbán seeks Chinese help and threatens

(Patria) - Hungary has lost its right to EU aid worth around one billion euros due to rule of law violations, as reforms were supposed to be implemented by the end of 2024, a spokesperson for the European Commission confirmed to dpa. To release the funds, the country had to implement reforms by the end of 2024. The expired funds, worth 1.04 billion euros, were intended for Hungary from the program to support structurally weak regions.

The funds were frozen at the end of 2022 after a European Commission analysis concluded that Hungary had neglected certain EU standards and fundamental values. To release the funds, Hungary had to implement sufficient reforms by the end of the year, including changing laws to prevent conflicts of interest and combat corruption.

Hungary turned to China for financial assistance and in April withdrew one billion euros in loans from Chinese state banks, a fact that only became public in July when the Hungarian State Debt Management Centre (AKK) published data.

China is very active in Hungary, with electric car manufacturer BYD building a large factory in Szeged, in southern Hungary, and battery cell manufacturer CATL building a mega-factory in Debrecen, in eastern Hungary.

Chinese companies are building a 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.

But despite China's support, Orbán is still trying to release the frozen funds. According to the European Commission, a total of around 19 billion euros in EU funds are currently blocked for Hungary, including further subsidies and COVID-19 aid.

Last month, Orbán threatened to veto the next seven-year EU budget if Brussels does not release the blocked funds. Budget talks are expected to begin in mid-2025. This is not the first time Orbán has issued such a threat, after initially refusing to agree to extend sanctions against Russia, which were due to expire at the end of January, at an EU summit last month.

In December 2023, despite ongoing criticism of rule of law violations in Hungary, the Commission released around 10 billion euros in frozen EU funds for the country, a decision criticized by some Members of the European Parliament.