The European Union (EU), as defined in its founding treaties, is built upon common values such as the rule of law, democracy, human rights, and fundamental freedoms.[i] However, recent developments in Hungary particularly the erosion of judicial independence and the implementation of new legal frameworks under the so called “Sovereignty Protection Office” are in direct contradiction with these core values. Members of the European Parliament (EP) have called for the suspension of EU funds, asserting that such practices violate the EU’s founding principles.
According to EU law, member states are obligated to respect the Union’s core values. The Court of Justice of the European Union (CJEU) has previously emphasized these obligations and demanded the cessation of measures that undermine the rule of law. For example, in 2021, the CJEU issued critical decisions against judicial reforms in Poland and imposed sanctions. Now, similar financial penalties are being considered against Hungary.
The European Parliament has formally urged the European Commission to act against the Hungarian government’s violations of EU values.[ii] This appeal reminds all member states that financial mechanisms can be restricted in response to breaches of legal obligations. The move also continues the precedent set by previous legal crises involving Poland and Hungary. Since 2020, the EU has developed mechanisms to suspend funding in cases of rule-of-law violations.
Politically, liberal, social democratic, and green factions within the EP support such sanctions, while conservative and far-right groups largely oppose them, creating intra-parliamentary conflict.
Since Prime Minister Viktor Orbán came to power in 2010, governance in Hungary has become increasingly centralized. The Fidesz government, led by Orbán, has expanded executive authority through constitutional reforms, limited the powers of the Constitutional Court, and weakened independent media oversight. One of the most controversial legal measures, the “Sovereignty Protection Act”, enables government control over critical media and civil society organizations. It allows for investigations into any entity receiving foreign funding, labelling them as potential “foreign influence agents.” These developments have led analysts to describe Hungary as a “hybrid regime” or “illiberal democracy.”
Hungary’s policies are widely seen as incompatible with the EU’s core values of democracy, rule of law, and human rights. While liberal and social democratic groups in the EU accuse Orbán’s administration of “soft authoritarianism,” the Hungarian government defends its actions as resistance to “Brussels’ interference in domestic affairs.”
Hungary’s foreign policy stance has also diverged from EU norms, with several strategic moves at odds with its EU membership. Orbán’s government is one of the few within the Union that has opposed sanctions against Russia and maintained energy cooperation with Moscow. A notable example is Hungary’s multibillion-euro agreement with Russian state firm Rosatom to expand the Paks nuclear plant, increasing the country’s energy dependence on Russia. Although Orbán frames this as “pragmatic cooperation,” it has sparked diplomatic concern within the EU.
Hungary has also sought closer ties with China. Although the controversial plan to open a campus of China’s Fudan University in Budapest was halted after public backlash, China-Hungary relations continue to flourish under the Belt and Road Initiative. This foreign policy direction not only distances Hungary from the West but also encourages the pursuit of alternative alliances under the guise of “independent foreign policy.” However, such actions threaten EU solidarity and contribute to systemic fragmentation within the Union.
The Orbán administration is criticized for accepting EU financial resources while disregarding its value system. Hungary ranks among the top recipients of EU funds per capita, yet questions remain over the fairness and transparency of how these funds are used. This inconsistency has led many to label Hungary as an “opportunistic partner” within the Union. Other member states, particularly those concerned about democratic backsliding in Eastern Europe, argue that Brussels should take a firmer stance.
EU budgetary support is intended to foster member state development. Hungary receives billions of euros annually, but these funds are contingent on adherence to principles such as the rule of law, democracy, and transparency. The suspension of such funds could hinder infrastructure projects and broader national initiatives. The EU has also begun to use these funds as a political tool. New regulations link disbursements to judicial independence and other democratic benchmarks, increasing pressure on states to implement reforms.
From an economic standpoint, Hungary may face a budgetary shortfall if EU funding is cut. The loss of these funds poses both an incentive for political reform and a risk of economic instability. Furthermore, this situation serves as a precedent for other EU states. If Hungary fails to comply with EU expectations, the suspension of funds may become permanent, leading to Hungary’s deeper isolation within the Union.
The EP’s call for the suspension of funds to Hungary is not merely a financial measure but a normative struggle to uphold the EU’s values. Hungary’s accelerating democratic erosion impacts not only its internal politics but also the cohesion and decision-making capacity of the EU as a whole. The institutional tension between the Commission and Parliament raises questions about how prominently the rule of law will feature in inter-institutional governance.
If a firm and consistent response is not issued in the face of Hungary’s actions, similar anti-democratic tendencies may be emboldened elsewhere in the Union. Hungary’s multi-vector diplomacy involving Russia and China presents a serious challenge to the EU’s geopolitical resilience. In this sense, the issue is not just about financial penalties; it is about whether the EU can uphold its foundational values.
Ultimately, Hungary represents a critical test for the EU. Can democratic values endure in the face of economic self-interest? The answer to that question will shape not only Hungary’s trajectory but the future of the Union itself.
[i] “The Treaty of Lisbon”, Euro Parl, https://www.europarl.europa.eu/factsheets/en/sheet/5/rule-of-law, (Date Accessed: 24.05.2025).
[ii] “MEPs call on European Commission to cut Hungary off from EU funds”, Euro News, https://www.euronews.com/my-europe/2025/05/22/meps-call-on-commission-to-cut-hungary-off-from-eu-funds (Date Accessed: 24.05.2025).
