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Hungary passes anti-graft law to avoid loss of EU funds

Monday’s (3 October) first anti-corruption bill was passed by Hungary’s parliament. Budapest is trying to prevent a loss in European Union funds during a recession when the forint is at record lows and its economy is heading into recession.

Prime Minister Viktor Orban and his ruling Fidesz party approved an amendment to the criminal Code to establish a procedure regarding criminal offences related the management of public properties. This allows for a judicial review in the event that an investigation is closed without an indictment or a criminal report is dismissed.

The bill was passed by Parliament with 136 votes in favor, seven voting against and fourteen abstention.

This legislation is one 17-point commitment Orban’s government made in order to prevent the suspension of billions more of EU money due to breaches of democratic checks, balances and weak anti-corruption safeguards. Read more For a complete list of Budapest’s commitments please visit:

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Faced with rising energy costs, inflation, record low forint, and a slowing economic growth, Orban, who has been at odds long enough with the EU, is now willing to fulfill EU demands to create institutions that reduce corruption risks.

The EU has until 19 November to evaluate Hungary’s actions, and determine if they reduce the risk of EU money being misappropriated. The bloc could approve cutting €7.5 million that were earmarked to Hungary, which is 5% of its 2022 estimated GDP.

EU Budget Commissioner Johannes Hahn told European lawmakers Monday evening that the 17 steps would be reassuring to the bloc if properly legislated and implemented.

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Hahn stated that money talks, and it is as simple as it sounds. It’s now up to us to accept Hungary’s word and assist the authorities in implementing this. These proposals will be implemented at key dates that are yet to be established.

DEMOCRACY?

Many EU legislators urged Hahn to not let Orban get away with it, but instead closely scrutinize the reforms in Hungary. The chamber recently declared that Hungary is not a democracy, but a hybrid regime of electoral autocracy.

Orban claims that Hungary, an ex-communist country with some 10 million inhabitants, is not more corrupt than other EU countries.

According to OLAF (the bloc’s anti-fraud agency), Hungary had irregularities in almost 4% of EU funds expenditures between 2015 and 2019, which is the worst among the 27 EU member countries.

Reuters reported in 2018 that Orban channeled EU development funds to his family and friends. This practice, human rights organizations claim has greatly enriched Orban’s inner circle and allowed him to consolidate his power.

Orban, who was in power for more than a decade, tightened the state’s control over media and courts, NGOs, academia, and restricted the rights and freedoms of women, gay men, and migrants. He also clashed with liberal Western Europe, which supports EU handouts.

The funds could be approved by the Hungarian government in the second half of the year, which would ease the pressure on the forint. Hungarian assets and the forint have been selling off as emerging markets were hit hard by the U.S. Dollar’s surge. Hungary’s vulnerability makes its assets particularly vulnerable to risk aversion.

Bank of America stated Monday that it expected progress to be made by Hungary towards… a recovery fund deal by mid-to-end-November. “The cash-strapped government cannot resist compromising with the EU.”

($1 = €1.0185)

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