But reaching an agreement was far from easy, underlines FD correspondent Ria Cats. “Hungary previously vetoed the introduction of the minimum profit tax, which many member states would like to see,” she says. “Moreover, Hungary withheld the Ukraine package, providing 18 billion in cheap loans.”
According to Cats, the European Commission will not transfer most of the aid to Hungary, due to the rule of law in bad faith. “He’s gotten too wobbly,” he says. «The fight against corruption is also very poor and there is a lack of an independent judiciary. Only when something is done about it does the EU say it can be sure its subsidies are well spent.’
Grant
And so the EU has offered the Hungarians a deal: in exchange for the loan package for Ukraine, only a small part of the EU subsidies for Hungary will be withheld. Instead of the full amount of EUR 7.5 billion, EUR 6.3 billion is now withheld. Cats: ‘It could be said that Hungary’s vote cost 1.2 billion euros, but it could also be said that the member states had until next Sunday to agree on those 7.5 billion. Otherwise it would not have happened at all and Hungary would still have received the money. So they just had to sit on that file, so you can say they lose 6.3 billion. For a country with a bad economy and high inflation, that’s a considerable sum.’
Setback?
But the Hungarian government itself doesn’t see it that way, argues Hungarian connoisseur and historian Huub Bellemakers, who also believes Hungary had the upper hand in this discussion. ‘They just say they achieved all their goals. They have to introduce less tax on profits and soon money will come from Europe, because they have worked so long to fight corruption,’ says Bellemakers. “Orbán’s government also says the European Union believes Hungary’s coronavirus recovery plans are ‘fantastic’, so ‘the money will come naturally.'”
And even skeptical Hungarians have been thought through with the timing of a 15% pension hike, says Bellemakers. ‘For people who don’t quite believe what is being said about the deal with the EU, there is now something being said about increasing pensions. And that increase is lower than last year’s level of inflation, but it might sound good for the Hungarian people.”