economic and political consequences for Hungary-EU relations. Brussels has voiced
serious concerns about the law’s compliance with EU rules, particularly on public
procurement, conflict of interest, and use of EU funds, potentially costing billions in
cohesion funding. Despite ongoing consultations and several amendments by Hungary,
a satisfactory resolution remains distant.
Since March, the European Commission and Hungarian government have been at odds over the November 2023 law on public construction projects, which Brussels argues may violate EU transparency and competition standards. A major issue, reported by Portfolio in April, is the law’s provision allowing certain investments to bypass public procurement procedures.
According to Brussels, these exemptions are not sufficiently justified and lead to a lack of transparency, while they may also violate the rules that ensure the efficient use of EU funds. Hungary had been warned of serious consequences, including frozen payments for operational programs, risking billions in EU funds. Additionally, the Commission criticized the law’s property ownership provisions, which may breach EU transparency rules.
Portfolio learned from the European Commission that the Hungarian Ministry of Construction and Transport responded to the EU’s concerns on April 24. The ministry confirmed replying to the Commission’s letter by the deadline, arguing that the law provides a coherent regulatory framework strengthening legal guarantees and contributing to the rule of law.
However, the European Commission told Portfolio that they are still assessing the Hungarian legislation, as implementing regulations were only amended and published in early August, with more expected. The Commission is in further discussions with Hungarian authorities before finalizing its assessment. Hungary made several tweaks to the legislation over the summer, requiring more EU evaluation.
The future of EU funding for Hungary remains uncertain, with billions in infrastructure investment at risk. Portfolio’s sources suggest a full suspension is unlikely as the government is cooperating. Negotiations are expected to continue, unlike other disputes between the government and Brussels, which remain deadlocked. Both EU and government sources suggest a resolution by year’s end, despite remaining points of conflict.
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Publish date : 2024-09-19 05:48:00
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