Democracy Digest: EU Mission to Hungary Sees No Reason to Unfreeze Funds

By Tim Gosling, Edit Inotai, Peter Dlhopolec and Claudia Ciobanu – Reporting Democracy

Bratislava, Budapest, Prague, Warsaw  

Elsewhere, Polish parties try to outdo each other over child handouts; the media is in the headlines in Czechia; and Slovakia’s new technocratic government gets to work.

Afact-finding delegation of the European Parliament’s Budgetary Control Committee left Budapest this week with concerns that the Hungarian government is not doing enough to fight corruption and to provide non-discriminatory access to EU funds. The visit of the delegation, which included German EPP politician Monika Hohlheimer and longtime Fidesz critic Daniel Freund of the Greens, met with government officials and representatives of civil society and the media. The MEPs complained at a press conference about “concentrations of public procurement awards in the hands of companies and municipalities linked to the government.” They were also alerted by media and NGOs to “intimidating actions, such as visits by the security services to company offices or extremely frequent audits” of companies the government wishes to bring under state ownership. Earlier, a report in Der Spiegel about a German cement company being pushed out of Hungary has caused considerable concern in German business circles, Hungary’s largest investor. The MEPs found clear signs of breaches of the rule of law in competition and procurement laws, and saw the continued use of government decrees as highly problematic. The only positive development highlighted was the newly established Integrity Authority, charged with fighting corruption, even though it has no ability to prosecute.

The delegation’s findings are unlikely to speed up Hungary’s access to the frozen EU funds, with Freund tweeting: “Question: When will Hungary get full access to EU funding again? Answer: When all the conditions are fulfilled.” Altogether 28 billion euros are at stake after the EU Commission blocked all 22 billion euros of Hungary’s structural funds and transfers from the post-pandemic recovery fund are pending approval due to concerns over the rule of law in the country. Regional Development Minister Tibor Navracsics said he was “moderately optimistic after the talks”, but of course blamed the committee for being “slightly politically biased.” The pro-government media dismissed the visit as politically motivated. Fidesz youth organization Fidelitas welcomed the MEPs with suitcases packed with euro notes, a referrence to the corruption scandal of EP vice president Eva Kaili. They failed to mention that while Kaili is being prosecuted, that is rarely the case in Hungary.

In other news, Oliver Varhelyi, the European commissioner for neighbourhood and enlargement from Hungary, found himself somewhat out of step with Hungarian foreign policy when he warned Bosnian Serb leader Milorad Dodik this week against visiting Moscow. “Our allies don’t go to Russia, that is my message,” Varhelyi said in response to a reporter’s question on Dodik’s upcoming visit. “Whoever wants to be our ally does not go to Russia.” The comments were picked over by the media, as Varhelyi is loyal to PM Viktor Orban and, as such, is often seen as Hungary’s ‘agent’ inside the EU Commission. Varhelyi’s remarks could be taken as indirect criticism of Foreign Minister Peter Szijjarto, a four-time visitor to Moscow since Russia’s invasion. There, he tends to praise Hungary’s good cooperation with Russia while not wasting too many words on condemning the invasion. Whether Varhelyi was trying to send a message to Hungarian diplomacy or just trying to stabilise his own, rather shaky, seat in Brussels, isn’t clear.

Lastly, Hungary blocked the next tranche (500 million euros) of military support for Ukraine within the framework of the EU’s European Peace Facility (EPF). “Hungary does not agree with the fact that the European Union, along with other existing tools, uses the European Peace Facility solely with regard to Ukraine, as this does not allow sufficient funds to be channelled to promote the EU’s interests in other areas,” the government spokesman’s office reasoned in an email response to Reuters. It said the funds should be used in the Balkans and in North Africa. However, it became quickly apparent there were other factors at play. The Hungarian government was outraged by Ukraine’s recent decision to put Hungary’s largest bank OTP on a list of “international war sponsors”, arguing the lender continues to operate in Russia despite EU sanctions. Szijjarto called the move “scandalous and unacceptable” and the latest example of the Ukrainian government’s “increasingly hostile attitude toward Hungary”. Meanwhile, energy giant MOL was hit with severe price hikes by Ukrainian oil pipeline operator Transneft and a major uproar ensued after unconfirmed reports said the EU Commission suggested Kyiv stop oil supplies to Hungary via the Druzhba pipeline. The EU Commission dismissed the reports as fake news and denied being in touch with Transneft or ever suggesting it shut off the pipeline.

Media in the headlines in Czechia; bill to transform energy sector

Despite promising to shore up the media’s role as a pillar of Czech democracy, PM Petr Fiala’s track record in office is questionable. In fact, after his government announced plans to raise VAT on newspapers to 21 per cent, he’s being forced to defend himself against accusations that he’s actually weakening the country’s quality media by driving “the last nail in the coffin” of Czech newspapers. EU Commissioner Vera Jourova warned over the weekend that the hike of the VAT rate to a European peak risks liquidating Czechia’s print media, and contradicts an EU trend amid the fight against disinformation to slash rates. “Even countries like Poland or Hungary have not taken such steps,” she noted. But Fiala appears unconcerned. He doesn’t believe the move will kill off any newspapers, and anyway, “people get access to information through internet sources, and public media are freely available, so there is no threat of disaster,” he shrugged in a TV interview.

At the same time, it’s notable that the main victims of the higher tax will be the oligarchs that have over recent years bought up most of the Czech press, in a bid to add political influence to their economic power. The leading example of this trend is, of course, former PM and leader of the opposition ANO party, Andrej Babis. And with that in mind, the governing coalition will on Friday convene an extraordinary parliament session to discuss a bill that would tighten up the ban on media ownership by members of the government. The ban was introduced in 2016 as part of a Conflict of Interest Act, which also banned companies owned by officials from receiving state subsidies. “Lex Babis”, as it was dubbed, forced the billionaire to cede control of his business empire – theoretically at least – by putting it into trust during his time in government. But the coalition now wants to amend the legislation so that it applies to ownership. Unsurprisingly, ANO has been delaying discussion of the bill for months. The governing parties, which insist the amendment is absolutely not aimed specifically at the ANO leader, say that if the obstruction persists, they will bypass any debate and force a vote next month. In 2021, the EU suspended subsidies to Czechia and demanded it tighten up legislation after finding that Babis had conflicts of interest.

Another bill due in the Chamber of Deputies soon will amend regulations governing the division of publicly-traded companies, which all sounds very dry but it paves the way for a fundamental transformation of Czechia’s energy sector. Approved by the government on Wednesday, the bill – dubbed “lex CEZ” – would reduce the required votes to split companies from 90 per cent of shareholders to 75 per cent, as well as the required quorum. This would allow the government to push through its plans to take control of the production assets of CEZ. Minority shareholders and financing complications have been blocking the energy group, in which the state holds 70 per cent, from building new nuclear reactors – the main pillar in the government’s energy strategy – for years.

Polish parties outdo each other over benefits; Ukraine female refugees denied rights

After Poland’s governing PiS party announced last weekend it planned to increase its signature monthly child subsidy from 500 zloty to 800 zloty (176 euros) if it wins the autumn election, the main opposition party PO made a surprise move. Rather than criticise PiS’s campaign pledge – for example, arguing it would undermine efforts to combat inflation – PO leader Donald Tusk said the increase should happen immediately, as of June 1, when Poles mark children’s day. On Wednesday, MPs from Tusk’s party even filed a draft law to that effect. PO’s proposal potentially puts PiS lawmakers in an awkward position: if they really support the measure, why wouldn’t they agree to its immediate introduction? Yet many voters might be willing to give PiS lawmakers the benefit of the doubt. As PiS leader Jaroslaw Kaczynski explained in response to Tusk’s proposal: “In a way I understand Tusk: PO have not been keeping their electoral promises, so they might be judged by their own measures. On the other hand, I don’t understand him, because it was only a few days ago that he was saying people who make use of this kind of program drink, beat their children and their wives, and yet we still want to give them more.” Kaczynski added preparing such a measure takes time and PO’s proposal is completely unserious and “impossible to implement.”

Women refugees from Ukraine are facing multiple barriers to accessing sexual and reproductive healthcare in CEE countries including Poland, sometimes forcing them to go back to Ukraine to get the help needed, according to a report published this week. The report, authored by several women’s rights groups including the Center for Reproductive Rights, concludes that many Ukrainian refugees who seek healthcare such as contraception, abortion care and maternal healthcare are exposed to harmful delays, anxiety and fear, financial burdens, institutional racism, and sub-standard care with direct consequences for their health and wellbeing. The study highlights such barriers not only in Poland, most notorious for its restrictions on access to abortion, but also in Hungary, Romania and Slovakia. It found that refugees are often forced to return to Ukraine to access the care they need. Leah Hoctor, senior regional director for Europe at the Center for Reproductive Rights, said: “The health and wellbeing of some refugees from Ukraine is being placed at risk because of failures to guarantee access to essential and time-sensitive healthcare and support services, compounding the harm they have endured as a result of the invasion of Ukraine.”

Slovakia gets new techno government; Kuciak retrial verdict eagerly awaited

Slovak President Zuzana Caputova appointed a technocratic government on Monday to replace the caretaker government led by PM Eduard Heger, arguing that the ceaseless fights and arguments within the governing coalition had been having a damaging impact on society. The respected economist and central banker Ludovit Odor will head this “government of experts” largely picked by the president. Odor has the right to veto any name proposed. Based on prior statements from the political parties, however, the government is not expected to win the necessary confidence vote in parliament, meaning it will have the same limited powers as the previous caretaker government of Heger. Even so, Odor said he plans to bring peace and economic stability back to the country, and continue to support Ukraine over the coming months. These plans can be achieved even without parliament, he said. His government wants to stay in power until a new government is formed after the September 30 vote.

After two and a half years since the shocking acquittal of the corrupt businessman Marian Kocner and his sidekick Alena Zsuzsova in the case of murdered investigative journalist Jan Kuciak and his fiancée Martina Kusnirova, all eyes in Slovakia were on the Specialised Criminal Court, which is expected to hand down verdicts in their retrial on Friday afternoon. Since the 2020 verdict that found the two not guilty of hiring the already sentenced killers on a lack of evidence, new evidence has emerged. Another man involved in the murders, Tomas Szabo, has since confessed in 2022. But Kocner and Zsuzsova, who are currently serving long prison sentences for other crimes, continue to claim they are innocent. The Kuciak case has been merged with the case of the planned murders of three prosecutors, including the current Prosecutor General Maros Zilinka. The pair is believed to have been the masterminds behind a plot to kill these prosecutors too.