EU civil war: Brussels withholds Hungary Covid funds unless law changed – leaked document

Hungary Foreign Minister says EU is ‘slow’

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A leaked document shows the European Commission expects Budapest to overhaul its public procurement rules to curb “systematic fraud”. The memo sets out a series of legal changes required of Prime Minister Viktor Orban’s government before it can receive funds from the bloc’s €750 billion pandemic bailout. The European Commission is managing the dispersal of the funds and has informed member states they must have their spending plans approved before cash is sent to capitals.

“Competition in public procurement is insufficient,” the document, obtained by the Reuters news agency, said referring to the changes expected on Hungary.

The memo cites “systematic irregularities” that “led to the highest financial correction in the history of EU structural funds in 2019”.

Budapest is set to receive around €6.3 billion in free grants from the EU’s recovery fund.

Brussels has ordered capitals to submit their spending plans for approval by the end of April or risk losing out on the cash.

Eurocrats, as well as other EU countries, will have to accept the proposals before the money is dispersed.

The Commission memo calls for improved data transparency and access to the information in Hungary.

It wants Mr Orban’s government to also introduce genuine competition between bidders and accountability in the country public procurement system to avoid fraud.

The document points out that Hungary had one of the highest single-bidding rates in the EU, which it says has led to overpricing.

Eurocrats also accuse Hungarian conflict of interest rules of being marred by loopholes.

The document said: “The Commission has been pushing for a better analysis and control of public procurement risks for many years.

“But there seems to be political opposition at the highest level. These measures are simple to implement from a technical perspective and fit into the digitalisation objectives.”

Budapest had irregularities in nearly four percent of its spending of EU funds between 2015 and 2019.

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EU anti-fraud body OLAF compared the figure to the bloc’s average of 0.36 percent and much worse than the second-worst score of 0.53 percent for Slovakia.

Brussels is ready to accept a delay in the dispersal of EU recovery fund cash in order to ensure reforms are pushed through.

France has expressed concern that any delays will hamper the bloc’s economic recovery from the coronavirus pandemic.

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An EU official said: “The overall balance between reforms and investments still needs to be fine-tuned.”

Eurocrats expect the EU handouts spent by countries on climate projects and digital transition.

Hungary has not yet commented on the EU demands, and has claimed it is working on a response.

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