Hungary stands to recover approximately 17 billion euros ($20 billion) in frozen European Union aid as officials met Friday in Budapest with incoming Prime Minister Péter Magyar's team, marking a pivotal shift after 16 years of democratic erosion under outgoing leader Viktor Orbán. The funds, withheld four years ago over corruption concerns and attacks on judicial independence, could provide a critical lifeline to Hungary's struggling economy—but only if Magyar's government acts swiftly to restore democratic safeguards.
European Commission spokesperson Paula Pinho emphasized the urgency in Brussels on Thursday, stating that "the clock is ticking for a number of topics." She described the Friday meetings as "preliminary talks" designed to ensure "that once the government is in place action can be taken, if appropriate, and that we do not waste any time." Magyar is set to take office in about two weeks, in early May.
A Window for Democratic Restoration
The frozen funds represent a rare moment of leverage for democratic accountability within the EU. European Commission President Ursula von der Leyen wrote on X on Tuesday that "there is swift work to be done to restore, realign and reform" Hungary's policies to unblock the money. "Restore the rule of law. Realign with our shared European values. And reform, to unlock the opportunities offered by European investments," she wrote. The EU executive noted that Orbán had often vilified von der Leyen during his campaign.
Magyar's party Tisza won a super-majority in parliament, positioning the incoming government to enact deep and quick reforms. Magyar has pledged to prioritize policies affecting judicial independence, academic and media freedom, and anti-corruption measures—precisely the areas where Orbán's government fell short. At his first public press conference five days ago, on April 12, Magyar acknowledged that Hungary "is in a very difficult financial situation" and said his government's task will be "to bring home the money that is hers."
The Human Cost of Democratic Backsliding
The Commission suspended the money to Budapest in 2022 over what it characterized as democratic backsliding by Hungary's right-wing populist government and failures to tackle corruption and ensure judicial independence. For more than a decade, the Commission accused Orbán of dismantling democratic institutions, taking control of the media, and infringing on minority rights. Orbán rejected the accusations and denounced them as interference in Hungary's sovereignty.
The consequences have been severe for ordinary Hungarians. Zsolt Darvas, a fellow at the Brussels-based think tank Bruegel, noted that out of the 16 billion euros originally allocated, Hungary has already lost about 2 billion euros because the funds were suspended for two years. Additionally, Hungary has been paying 1 million euros a day since June 13, 2024—nearly two years of daily fines—on top of a 200 million-euro fine over Orbán's refusal to align Hungary's asylum processing claims with EU standards.
The frozen funds are split between 10 billion euros of COVID recovery funds and 6.3 billion euros in cohesion funds designed to lift up struggling economies within the EU. Brussels and Budapest are rushing to first unlock the COVID funds because they are set to expire later this year in August.
Swift Reforms Within Reach
Darvas said Magyar can move almost instantly to reform Hungary enough to unlock the funds. "All the legislative work can be done in a single day if there is a will from the Tisza party to do it," he said. "That's relatively straight forward and not technically difficult." This would involve changing how judges are selected and what power they have—core elements of judicial independence that Orbán systematically undermined.
A year after the initial suspension, the Commission found that the government had carried out sufficient reforms to have around 10.2 billion euros ($12.1 billion) released, demonstrating that progress is possible when political will exists.
Magyar has also signaled a break with Orbán's obstructionist approach to European cooperation. Unlike his predecessor, Magyar said he would stick to a deal struck in December to provide Ukraine with a much-needed 90-billion-euro loan. Orbán had vetoed the bill after initially agreeing to it, enraging EU officials and counterparts across the 27-nation bloc.
Beyond Immediate Relief
Darvas said Hungary could follow Poland's path by staying mostly closed to migration but still respecting EU law and thus ending the costly daily fines. He emphasized that Hungary's economic crisis won't be solved by these funds alone, but by complying with EU regulations, the new government will signal that the country is a stable place for investments.
Hungary, a major net recipient of EU funds, could also receive substantial additional resources if it joins the EU's 150 billion-euro Security Action for Europe initiative, or SAFE, which is designed to boost Europe's defense readiness at a time when the U.S. has been diminishing its role in the continent's security. So far, 18 of the EU's 27 nations have received low-interest defense loans, and Hungary is eligible for 16 billion euros through the program. With the other two tranches of cash, these funds would roughly equal 15% of Hungary's GDP, according to an analysis by Jeremy Cliffe at the European Council on Foreign Relations.
Why This Matters:
The restoration of EU funds to Hungary represents more than an economic transaction—it is a test case for whether democratic accountability mechanisms can effectively counter authoritarian drift within the European Union. For ordinary Hungarians, the stakes are immediate: the frozen funds represent approximately 15% of the nation's GDP when combined with available defense loans, resources that could address pressing economic needs in healthcare, education, and infrastructure. The daily million-euro fines Hungary has paid for nearly two years—totaling hundreds of millions of euros—represent public money diverted from social services because of one leader's refusal to respect shared democratic standards. Magyar's commitment to judicial independence, media freedom, and anti-corruption reforms signals that democratic institutions, when protected, can deliver both accountability and economic stability. The speed with which these funds can be unlocked—potentially in a single day of legislative action—underscores how quickly authoritarian damage can be reversed when political will exists, offering hope to citizens across Europe living under similar pressures.