Debate: Assessment of Hungary's compliance with the rule of law conditions under the Conditionality Regulation and state of play of the Hungarian RRP
Date: MONDAY, 21 NOVEMBER 2022
Speaker: Didier Reynders
Language: EN

If I have well followed the previous discussions is an important debate about the rule of law that we will have. So the European Commission is highly appreciative of the commitment of this Parliament in promoting and defending the rule of law in all the Member States. In this perspective, it is important for us to have a constructive dialogue on the enforcement of the Conditionality Regulation and on the opportunity that the recovery and resilience plans offer to drive change in the Member States – in this case Hungary – to improve and strengthen the rule of law situation. Today, within the European Union, we have a whole range of instruments that the Commission is ready and has proven to be able to use effectively to protect the EU budget from breaches to the principles of the rule of law.  Different instruments apply different methodologies and are subject to different rules. The Conditionality Regulation aims at protecting the EU budget and the financial interests of the Union against breaches of the principles of the rule of law, compromising the correct use and management of EU funds. This concerns breaches of the principles of the rule of law that have a sufficiently direct link with the implementation of the Union budget or the protection of the financial interests of the Union. This requirement is clear from Conditionality Regulation and it has also been stressed by the Court of Justice.  The case in relation to Hungary is the first case under the Conditionality Regulation. It was launched in April this year, when the Commission notified Hungary of its concerns relating to breaches of the principles of the rule of law. Serious deficiencies and irregularities in the public procurement framework, and Hungary’s inability to tackle corruption directly affects or risks affecting the sound financial management of the Union.  In its finding, the Commission considered that in Hungary there are systemic irregularities, deficiencies and weaknesses in public procurement, insufficiencies in detecting, preventing and correcting conflicts of interest, concerns related to the use of Union funds by public interest trusts, weaknesses in the effective pursuit of investigations and prosecutions in cases involving Union funds, and shortcomings in the anti-corruption framework. These issues and their recurrence over time demonstrate a systemic inability and failure on the part of the Hungarian authorities to prevent decisions from being in breach of applicable law.  To address all these concerns in a sustainable manner. Hungary committed to 17 remedial measures that would address the risk to the EU budget related precisely to those breaches. These remedial measures were carefully assessed by the Commission. In fact, on 18 September, when adopting the proposal for the Council implementing decision, the College considered that if these remedial measures are correctly specified in enacting laws and implementing rules, and that the implementing steps are fully and effectively implemented, then taken together, in principle, they could be capable of addressing the issues at stake. However, pending the assessment of the details and implementation of the key implementation steps, the College considered that a risk remains for the EU budget. It was in view of this that the Commission proposed budgetary protection measures to the Council.  Since then there have been intense discussions with the Hungarian authorities at technical and political level to monitor the steps taken by Hungary in the implementation of its commitments. As set out in the Commission’s proposal to the Council, Hungary committed to fully inform the Commission about the fulfilment of the key implementation steps by 19 November. On that date, the Commission received details of the measures taken by Hungary so far. The Commission is now carefully analysing all the information received, including the available versions of the legal text, to verify the full and correct implementation of the commitments by Hungary. The Commission will finalise its assessment on the basis of the information that it has received by that deadline.  The intention of the Commission is to come with its assessment without delay and to inform the Parliament and the Council. Ultimately, the final decision on whether to adopt budgetary protection measures or not lies with the Council. The assessment of the Commission will feed into the process of the Council and is meant to support the Council in its decision.  On 13 October, the Council decided to extend the power to decide on the measures proposed by the Commission by two months, namely until 19 December. This will allow for consideration of the fulfilment of the commitments by Hungary. The Council could then adopt, amend or reject the Commission’s proposal by qualified majority.  Rest assured that, as has been the case since the adoption of the regulation and the start of this process, the Commission will continue to provide Parliament with information on the relevant developments and remains available to update you as needed. Our ultimate objective under this mechanism is that the Union budget is no longer at risk and we hope to achieve this as soon as possible through the adequate reforms in Hungary. Concerning the Hungarian recovery and resilience plan, the Commission had many discussions with Hungary on their proposed plan. We have made progress on a number of issues over the past months. As for all the Member States, the Commission assesses the plan against the 11 criteria set out in the RRF Regulation. The same criteria apply to all the Member States. The criteria require notably an assessment of whether the measures address the challenges identified in the country-specific recommendations of the European Semester or a significant subset of those recommendations and whether the plans provide an adequate control and audit mechanism.  For Hungary, the country-specific recommendations refer to the need to address challenges concerning the rule of law situation, in particular as regards anti-corruption measures and the independence of the judiciary. The Commission has therefore been discussing the setting of milestones and targets in the Hungarian plan that would cover these country-specific recommendations. We are now aiming to conclude our assessment on the recovery and resilience plan as soon as possible. The idea is that the milestones of the recovery and resilience plan also fully reflect the remedial measures proposed by Hungary under the conditionality procedure. Furthermore, the disbursement of funds to Hungary should be linked to the fulfilment of milestones covering those remedial measures, as well as those linked to strengthening the independence of the judiciary. And about the independence of the judiciary, I have asked the Minister of Justice of Hungary, Judit Varga, to implement completely the country-specific recommendations coming from the European Semester and the recommendation that we have put in the last rule of law report, published in July 2022.  We apply the tools at our disposal in good faith and with the firm intention to raise the rule of law standards and improve the situation on the ground. We will continue monitoring the legal and practical implementation of Hungary’s commitments and will not let go until we are satisfied that the EU budget can be protected. So we are working on our own assessment. I thank you for this opportunity to explain what we are doing for the moment in those procedures. And, of course, thank you for your attention. I am looking forward to our debate.