MEPs will debate the Commission’s proposal to freeze funds for Hungary to protect the EU budget in view of breaches of theover rule of law concerns in the country. Opening statements by Mikuláš BEK, Czech Minister for European Affairs and by Johannes HAHN, European Commissioner for Budget and Administration. This transcription is a result of an authomatic process. Please check against delivery.

statement

Strasbourg

debate

plenary session

EU mechanism on democracy, the rule of law and fundamental rights (T)

EU - Hungary (T)

HAHN, Johannes (AT, EC)

BEK, Mikuláš (CZ)

Commission proposal for measures under the Rule of Law Conditionality Regulation in the case of Hungary: opening statements by Mikuláš BEK, Czech Minister for European Affairs and by Johannes HAHN, European Commissioner for Budget and Administration

SOUNDBITE (English), Mikul&aacute;&scaron; BEK, Czech Minister for European Affairs, Mr President, Honourable Members, Commissioner, thank you for giving me the floor in this debate to discuss with you a very topical issue that is essential for the functioning of our Union. The council welcomes the framework established by the regulation on a general regime of conditionality for the protection of the Union budget, as there is a clear link between respect for the rule of law and the efficient implementation of the EU budget in accordance with the principles of sound financial management.

SOUNDBITE (English), Mikul&aacute;&scaron; BEK, Czech Minister for European Affairs, We are, of course, satisfied that such regulation saw the light in 2020 with the work of the co-legislators and the strong support of the European Parliament. It is in the context of the conditionality regulation that the Council has received a proposal from the Commission on Measures for the Protection of the Union Budget in Hungary. I can inform you that the Council preparatory bodies are currently examining the proposal in detail, both on process and on substance.

SOUNDBITE (English), Mikuláš BEK, Czech Minister for European Affairs, Apart from discussions at technical level, the EU ambassadors will discuss tomorrow the proposal for a second time. All elements are being thoroughly considered by member states, including the remedial measures proposed by Hungary. You are well aware of the political sensitivity of the file. Moreover, the fact that this is the first time that the mechanism foreseen in the conditionality regulation is put in motion requires member states to treat this dossier in an even more careful manner.

SOUNDBITE (English), Mikuláš BEK, Czech Minister for European Affairs, Allow me to indicate a very important point. The role of the Commission in this process is crucial. We trust the Commission's role as guardian of the treaties. The Council counts on the Commission's exhaustive assessment of the situation to take a sound and well informed decision. So it is in this spirit that we work closely with the commission, but also with the member state involved to make a decision that is the best for the EU budget and for European citizens.

SOUNDBITE (English), Mikuláš BEK, Czech Minister for European Affairs, As you know, the time frame provided by the conditionality regulation is very strict. The council will respect all deadlines foreseen in the regulation and act very swiftly. Therefore, I can assure you that the council is and stays fully committed to playing its role in protecting the EU budget as foreseen in the conditionality regulation. Thank you very much.

SOUNDBITE (German), Johannes HAHN, European Commissioner for Budget and Administration, First, I would like to thank you again for your commitment in the constructive dialogue on the enforcement of the conditionality regulation. The Parliament was always very tough and vocal supporter. As you know, we have a whole toolbox of instruments with different methodologies to protect the union budget. Within this toolbox the conditionality regulation aims at protecting the Union budget when breaches of the principles of rule of law affect or risk affecting the Union's financial interests.

SOUNDBITE (German), Johannes HAHN, European Commissioner for Budget and Administration, Other instruments in the rule of law toolbox are dedicated to breaches of the rule of law per se. As President von der Leyen also confirmed in the State of the Union address, the Commission will use the conditionality mechanism whenever the conditions are fulfilled. As you are aware, at the moment, there is one ongoing case. On the 18th of September, the Commission adopted the very first proposal for a Council implementing decision under the conditionality regulation.

SOUNDBITE (German), Johannes HAHN, European Commissioner for Budget and Administration, It proposed measures to the Council for the Protection of the Union Budget against breaches of the principles of the rule of law in Hungary. This procedure started when the Commission notified Hungary on the 27th of April about its concerns relating to breaches of the principles of the rule of law that create a serious risk for the Union budget to call. These concerns are systemic irregularities and deficiencies and weaknesses in public procurement. Second, insufficiencies in addressing conflicts of interest and concerns regarding public interest funds.

SOUNDBITE (German), Johannes HAHN, European Commissioner for Budget and Administration, Further weaknesses in the effective pursuit of investigations and prosecutions in cases involving Union funds. And finally, shortcomings in the anticorruption framework. Following several intermediate steps at the end of August, Hungary committed to 17 remedial measures to address the risks of the Union budget specified in the notification. This I explained and assessed in the recent commission proposal for a Council implementing decision available to the Parliament. With these measures, Hungary has made important commitments in the right direction and I explicitly welcome this constructive engagement. I have to say, even if it arrived at the late stage in the procedure.

SOUNDBITE (German), Johannes HAHN, European Commissioner for Budget and Administration, So some examples of the remedial measures, a new and independent integrity authority with extensive powers as regards the prevention, detection and correction of word, conflicts of interest, corruption and other irregularities affecting the Union's financial interests. And anti-corruption task force with strong involvement of specialised NGOs and the modification of the Criminal Procedure Code to allow for an effective judicial review of prosecutorial decisions.

SOUNDBITE (German), Johannes HAHN, European Commissioner for Budget and Administration, Further, the systematic use of the Commission's data mining and destroying tool, which is a comprehensive database of projects combined with public information to help identify risks related to beneficiaries, contracts or contractors. Further changes to the Public Procurement Act to clarify rules applying to public interest funds. Further reform of the ESA declaration system for high profile public officials, which means members of government, but also MPs.

SOUNDBITE (German), Johannes HAHN, European Commissioner for Budget and Administration, Our conclusion is that, taken together, the proposed remedial measures could in principle be capable of addressing the issues described in the notification if, and I stress, if they are correctly specified in the relevant laws and rules and implemented accordingly. Another conclusion I draw from this without the conditionality mechanism, none of this reform measures would be in place. And without the European Parliament, the conditionality mechanism would not exist in its current form.

SOUNDBITE (German), Johannes HAHN, European Commissioner for Budget and Administration, Of course, pending Hungary's fulfilment of these criteria at this stage, the Commission considers that the risk for the budget remains a reason for which the commission proposed measures through the council. Hence, the Commission proposed a suspension of 65 per cent of the commitments for three operational programmes under cohesion policy. This amounts to an estimated amount of seven point five billion euro, which means over a third of Hungary's cohesion envelope.

SOUNDBITE (German), Johannes HAHN, European Commissioner for Budget and Administration, While those three programmes, because there will be mainly implemented through public procurement and the Commission considers that they are likely to be affected again by the breaches of the principles of the rule of law.

SOUNDBITE (German), Johannes HAHN, European Commissioner for Budget and Administration, A second measure is the prohibition to enter into legal commitments with the so-called public employment and public interest. The Council has now one month from the 18th of September to decide on the measures. And we have heard there will be a decision tomorrow if I was right. But they have to take the decision by qualified majority. So this spirit may be extended by a maximum of two additional months.

SOUNDBITE (German), Johannes HAHN, European Commissioner for Budget and Administration, A number of key remedial measures should be implemented by the 19th of November 2022. And of course, we will monitor these key elements very closely in the coming weeks. Hungary has committed to fully inform the Commission about the implementation of the remedial measures by the 19th of November, as also outlined in a timeline published in our proposal.

SOUNDBITE (German), Johannes HAHN, At that point, we will assess the situation again. So be rest assured that as in the case, since the adoption of the regulation, the Commission will continue to provide you with updates on relevant developments. Objective is again that the Union budget is no longer at risk and we hope to achieve this as soon as possible so that adequate reforms and in Hungary and not only the reforms, but also of course, more important to the proper implementation of these measures. Thank you very much.