Monthly newsletter Hungary – December 2022
European Commission approves Hungarian reconstruction plan – and suspends payments
At a press conference on November 30, the European Commission announced that it would initially withhold 13.3 billion euros in EU funds from Hungary. On the one hand, it made a recommendation to freeze the payment of EU funds (7.5 billion) that Hungary is entitled to from the EU's seven-year budget. Specifically, this represents 65 percent of the three operational programs Energy and Environment, Transport and Regional Development, which in total accounts for around a third of the total EU budget allocated to Hungary. On the other hand, it approved the Hungarian Covid reconstruction plan, which is to be financed with 5.8 billion euros from the EU budget, but initially refused to disburse these funds.
Both measures were justified by the previous alleged problems with public procurement and the fight against corruption. Hungary has made progress with its 17-point program since the last negotiations in September, but has not met all demands. The suspended funds from the seven-year budget would only be released once the 17 public procurement and anti-corruption measures are fully implemented. The Corona aid amounting to 5.8 billion euros would only be paid out if Hungary met a further 10 points, i.e. a total of 27 requirements from the Commission.
With regard to freezing the 7.5 billion withheld from the EU budget, a decision in the European Council is expected in December, but 15 EU member states, which together make up at least 65 percent of the total EU population, would have to agree.
Hungary gets new energy ministry
"The sanctions policy imposed as a result of the Russian-Ukrainian war threatens to cause significant damage to both the energy and economic sectors. In order to counter these threats, it is justified to have a separate ministry for both areas in the government's task-sharing structure," the Prime Minister explained in the draft law on the reorganization of ministries. With the resignation of László Palkovics, the Ministry of Technologies and Industry was dissolved; its tasks will now be taken over by the Ministry of Economy (Industry), the Ministry of Construction and Investment (Transport) and the Ministry of Culture and Innovation (Higher Education). Responsibility for the nuclear power plant in Paks remains unchanged with the Foreign Ministry under Péter Szijjártó.
Critical supply situation – lifting of the fuel price freeze
The fuel price cap, which was originally planned to last until at least the end of December, will be ended early. Until recently, private consumers whose cars were registered in Hungary were able to fill up with petrol or diesel for 480 forints per liter (around €1.20). As of December 7th, fuels will again be offered based on the market price, in the case of petrol this means a current price per liter of around 641 forints (around €1.60), diesel costs just under 700 forints (around €1.75). In fact, there has been a fuel shortage at Hungarian gas stations for weeks, and the situation particularly worsened at the beginning of December. Long queues had formed at petrol stations across the country; fuel was often no longer available at the capped price, but petrol and diesel at market prices were also running out in many places. In the past few days, around a quarter of all gas stations have been out of service, the MOL Group said. “The supply situation is clearly critical, demand is skyrocketing, consumers are stockpiling and panic buying is occurring.” – explained György Bacsa, strategic director of MOL
Last but not least, there have been increasing irregularities in oil imports from Russia to Hungary, which are likely to be exacerbated by the embargo against Russian crude oil that came into force on December 5th. Although Hungary remains exempt from this measure, the new energy sanctions are expected to also have an impact on the Hungarian economy as global supply is likely to decline.
President Novak visits Zelensky
At the invitation of Ukrainian President Volodymyr Zelensky, the Hungarian president traveled by train to Kiev on November 26, where she took part in the conference of the humanitarian initiative “Grain from Ukraine”. The initiative to alleviate the global food crisis is primarily aimed at supporting the supply of Ukrainian food to African countries. At a joint press conference with the Ukrainian president, Novák emphasized that “responsibility for the war in Ukraine rests crystal clear with Vladimir Putin.”
Novák also announced that Hungary will deliver 10,000 tons of grain worth $3.5 million to Africa as part of the program and will also provide support in the logistical management of the aid program. The Hungarian President also spoke about the Hungarian minority in Carpathian Ukraine, where she last visited shortly after the outbreak of the war and helped war refugees there. “We have 150,000 reasons to end the war and create peace,” Novák said, referring to the approximately 150,000 ethnic Hungarians in Ukraine, adding that so far about 500 Transcarpathian Hungarians have been wounded or died on the front.
Since the outbreak of war, the meeting between Novák and Zelensky represented the highest level of diplomatic contacts between Hungary and Ukraine. Following her visit to Kiev, Novák traveled to Carpathian Ukraine, where she met with representatives of the Hungarian minority and with Viktor Mikita, the governor of Zakarpattia Oblast. Novák and Mikita discussed joint humanitarian projects and talked about the security situation in the region. At the meeting, Mikita praised ethnic Hungarians from Carpathian Ukraine for their loyalty to Ukraine.
Vote on NATO accession by Finland and Sweden expected at the beginning of February
At a press conference following the V4 summit in Košice on November 24, Viktor Orbán announced that the approval of Finland and Sweden's NATO accession would be voted on at the first parliamentary session in 2023, probably in February. Of the 30 NATO members, 28 have already ratified the accession of the two northern European countries; the approval of Hungary and Turkey is still pending. Foreign Minister Péter Szijjártó had previously explained that due to the discussion of draft laws in the light of the rule of law procedures with Brussels, there was simply no time to put the question of membership on the National Assembly's agenda.
To the source:
The German-Hungarian Institute for European Cooperation is intended to provide a forum for academic, scientific and political dialogue between Germany and Hungary and to familiarize decision-makers and interested specialist audiences from both countries with topics, debates, processes, thought patterns and ideas from the other country. The aim is to achieve greater understanding, communication and constructive cooperation by objectifying the German-Hungarian discourse and thus renew our Europe together.
We would like to support this goal and publish excerpts with the kind permission of the authors. The complete issue can be found here as a PDF. The institute's website you can reach here.
