Hungary Bows to EU Pressure on Foundations in Pandemic Fund Plan

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Hungary has bowed to European Union pressure by reversing a bid to channel billions of euros of pandemic-relief financing from the bloc to controversial university foundations led by Prime Minister Viktor Orban’s allies.

Hungary’s plan for using the EU funding, submitted last week, no longer calls for earmarking money for the “renewal of universities.” That had been the third-biggest item in its draft proposal -- at 1.19 trillion forint ($4.1 billion) of 5.8 trillion forint in EU grants and loans. The new plan, released Monday, scales back the total to 2.51 trillion forint as the government no longer seeks loans.

Parliament last month transferred a vast array of state assets to quasi-private foundations, a majority of which will run state universities. Their boards will be controlled by the prime minister’s allies, who can have lifelong terms and can name their successors. Opposition parties decried the move as the misappropriation of public funds while a dozen European Parliament members urged the EU to block the funding on corruption concerns.

After the uproar, Cabinet Minister Gergely Gulyas said the government would seek to finance universities “mostly without EU funds,” partly to “nip in the bud” a potential conflict with Brussels.

Hungary may still seek to channel a fraction of the funds to foundations. According to the revised financing plan, 281 billion forint will be earmarked for developing a “highly educated, competitive labor force.” Part of it could be designated for universities.

The biggest items in the revised plan are for health care, which makes up more than a third of the total, and “sustainable green mobility.” The proposal still needs approval from Brussels before disbursements can begin.

©2021 Bloomberg L.P.

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