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The European Commission said it is scrutinising Hungary’s request for €17.4 billion under the European Union’s Security Action For Europe (SAFE) programme due to the country’s poor record on public procurement transparency and conflicts of interest, with MEPs warning that the money could be diverted for the political benefit of Prime Minister Viktor Orbán.
Hungary is the only EU country where EU funds are suspended due to the high risk of corruption. Out of the €27 billion foreseen for Hungary in this budgetary period, €17 billion is suspended, with payments conditional on reforms to the public sector.
Set up in response to threats from Russia, SAFE provides low-cost loans from the EU to member states to boost their defence industries. In the latest funding round, Hungary applied for €17.4 billion, the third-largest sum of any country.
“It’s difficult for me to imagine a situation where we can enter into the loan agreement and start to disburse if it’s clear that the conditions that are already seen in the same regulation are not met,” said Commissioner for Budget, Anti-Fraud and Public Administration Piotr Serafin at a hearing at the European Parliament on Monday evening.
The EU started the so-called conditionality mechanism against Hungary in 2022. This tool enables the suspension of funds where systemic corruption risks are identified.
Serafin said that the criteria apply to SAFE funds as well, and that once Hungary’s national defence programme has been approved, the EU will investigate how the money will be spent.
“There will be a possibility to look into how the Hungarian government plans to ensure the protection of the financial interest of the budget, how they plan to implement specific rules with respect to public procurement, conflict of interest, and public interest trusts,” Serafin said. “All those weaknesses that have already (been) identified. Yes, the conditionality regulation mechanism applies to all EU funds, including SAFE.”
On Monday, the Commission approved seven national defence plans. The Hungarian submission was not among them.
Last week, the European Parliament held a debate about Hungary’s SAFE application in which many MEPs demanded safeguards related to the spending. Some warned that the payment could be exploited to boost Orbán’s chances of re-election in April.
“This is a huge present to Orbán, because he will get a big part of it before the elections in Hungary,” Dutch Green MEP Tineke Strik told Euronews, “and because of the lack of conditions, he can use it for his own campaign and sell it as a sign of the legitimacy of his regime.”
But MEP Tamás Deutsch, from Orbán’s governing party Fidesz, said EU scrutiny of SAFE is a part of a political campaign against Hungary.
“No matter how hard they work against Hungary in Brussels, we will stand up for the Hungarian national interest, and we will obtain every last eurocent of the resources that are due to Hungary, the Hungarian people and Hungarian families,” Deutsch said.
The EU is set to decide on the SAFE payments in the first quarter of this year.