Tackling the Union’s “Orbán Problem” Now

The EU is facing an “Orbán problem”. That much is clear. The Hungarian government not only pursues an illiberal domestic agenda that violates the Union’s values in Article 2 TEU, but also cultivates close ties with autocratic regimes abroad, particularly with Russia. This is reflected in Hungary’s voting behaviour at the EU level. The Union’s common foreign and security policy, which usually requires unanimous decisions, has been taken hostage: the Hungarian government consistently uses its veto powers to block Ukrainian military aid and dilute sanctions against Russia. Orbán has turned from a threat to the European community of values into a fully-fledged security risk.

Even if the situation has become life-threatening for the Union, it is not desperate. A window of opportunity has arisen to tackle the Union’s “Orbán problem”. On the one hand, there is momentum to revive the Article 7 TEU procedure and strip Hungary of its voting rights in the Council. This requires a sensible approach. The Commission should submit a new proposal under Article 7(2) TEU focusing on breaches of solidarity and threats to the Union’s security. Moreover, that proposal should be coupled with an interinstitutional agreement obliging the European Council to take a vote within a certain time frame. On the other hand, the timing appears favourable to sharpen the instruments of financial conditionality and increase the pressure on the Hungarian government.

Reactions, inactions, and over-reactions

Orbán’s course has given rise to very different reactions. Whereas the EU institutions have increased the legal and financial pressure, Hungary’s fellow Member States seemed largely paralysed. Already in 2018, the European Parliament launched a procedure under Article 7(1) TEU to determine the risks of breach of the Union’s values. This proposal was never put to a vote, but lingers in the General Affairs Council for 7 years now. It was last on the Council’s agenda in November 2024 with no tangible results: The Commission provided an update, ministers had an opportunity to comment, and Hungary reacted. The Presidency then concluded that the Council “remains seized of the matter”. Meanwhile, academic proposals are growing ever more extreme. Some scholars have proposed to expel Hungary, either by recourse to public international law or by creating an EU expulsion mechanism. Others go so far to suggest a collective exit of all Member States by repurposing the exit clause in Article 50 TEU and replacing the existing Union with a new one – without Hungary.

July of opportunities

This blogpost suggests a more realistic, twofold strategy: turning Article 7 TEU operational and increasing financial conditionality. Currently, there is momentum for both paths. First, the Russian sanction packages require a renewal until 31 July 2025. Every six months, the Council must extend these sanctions. Hungary will surely try to block them. This leads to an extremely dangerous situation. Since 2022, Russian central bank assets of 200 billion EUR have been frozen in Belgian clearing facilities. These assets generate billions in interest. The EU decided to use these windfall profits to support Ukraine. If Hungary blocks the sanctions’ extension, these funds would have to be released. In light of the fading US support, the consequences would be catastrophic. For that reason, there are growing voices among the Member States to finally pull the trigger on Article 7 TEU. Second, the Commission will present its formal proposal for the next Multiannual Financial Framework in July 2025. In the slipstream of this proposal, the Commission should suggest a stronger value conditionality for the disbursement of EU funds. Further momentum is being generated by the incoming German government. The coalition agreement contains an entire chapter on Article 2 TEU. In particular, CDU, CSU and SPD agreed to take “more consistent” action against violations of the rule of law and use existing instruments, such as the suspension of voting rights and the withholding of EU funds, “much more consistently” than before. Moreover, the incoming chancellor vowed to take on a more proactive role on the European stage by reactivating the “Weimar Triangle”.

Opportunity to revive Article 7 TEU

These developments could become a defibrillator for the “dead” Article 7 TEU procedure. Once described as “nuclear option”, this procedure turned out to be an impasse. As such, it is hardly surprising that reforming this provision is key to any proposal for Treaty change, be it by the European Parliament, expert groups, or academics. July’s showdown might open a window of opportunity to revive that procedure – if pursued in a sensible manner.

Let’s take a step back. Article 7 TEU consists of two tracks. Whereas Article 7(1) TEU allows the Council to determine the risk of a breach of Article 2 TEU by four-fifths majority, it is the European Council that determines under Article 7(2) TEU the existence of a breach by unanimous decision. Both tracks are independent of each other. However, only the latter one allows the Council – in a subsequent step – to suspend certain rights of the respective Member State by qualified majority (see Article 7(3) TEU). Thus, suspending Hungary’s voting rights cannot be based on the Parliament’s pending proposal under Article 7(1), but requires a new one under Article 7(2) TEU. Moreover, this proposal can only be submitted by the Commission or one third of the Member States. What could a successful proposal look like?

Substance: solidarity and security

Substantively, the question arises which EU values have been breached by Hungary. Of course, recourse can be made to the Parliament’s pending proposal, which invoked violations of democracy, the rule of law, and human rights. Justifying such a decision would be easy as the situation in Hungary has only deteriorated since 2018. Moreover, the Commission – supported by 16 Member States – has explicitly raised a breach of Article 2 TEU in infringement proceedings concerning Hungarian violations of LGBTIQ* rights. It seems very likely that the Court will accept the Commission’s plea. For most Member States, a judicially established violation of EU values would be hard to ignore in an Article 7(2) TEU procedure. Yet, the Court’s decision is not expected before the end of the year. In any case, many Member States might not support such a proposal if it is based on the values of democracy, the rule of law, and human rights. Especially Slovakia under Robert Fico, which has followed Hungary’s path into illiberalism, can be expected to block it – for fear of being next in line.

For that reason, I suggest a different approach: The Commission should focus on the value of solidarity. While the first sentence of Article 2 TEU mentions the values of democracy, the rule of law, and human rights, the second sentence adds that these values are common to the Member States in a society in which solidarity and certain other principles prevail. Article 7 TEU allows only for the enforcement of “values”. As only the principles of Article 2 TEU’s first sentence are explicitly referred to as such, some might reject that solidarity is a “value” that can be enforced by Article 7 TEU. Yet, the Court has not adopted such a nuanced interpretation. In recent infringement proceedings against Hungary, it stressed that “the principle of solidarity is … one of the values common to the Member States on which the European Union is founded, pursuant to Article 2 TEU” (see para 116).

What does solidarity require? In the same judgment, the Court stated that Member States may not unilaterally upset “the balance between the advantages and obligations arising from its membership of the European Union” (see para 117). Threatening the security of all other Member States to foster one’s own advantage – and systematically using vetoes as leverage for other concessions – strikes at the very core of solidarity among the Member States. The Hungarian hostage-taking of the CFSP could thus be qualified as such a breach.

Procedure: forcing a vote

Procedurally, the European Council needs to take a swift decision. The Parliament’s proposal shows that the Council generally avoids difficult votes with uncertain outcomes. In order to force the Member States to take a stance, the Commission should therefore combine its proposal under Article 7(2) TEU with an interinstitutional agreement. The European Council could commit to take a decision in a certain time frame, for instance within a month. According to Article 295 TFEU, the EU institutions can conclude binding agreements to regulate their cooperation. Even though the European Council is not mentioned in that provision, Declaration No 3 annexed to the Treaty of Nice shows that the underlying basis for such agreements is the principle of sincere cooperation among the institutions, today enshrined in Article 13(2) TEU. As such, the European Council can resort to this form of inter-institutional cooperation as well. The voting modalities for the conclusion of this agreement usually correspond to its content. Since the timing of a vote is a procedural question, one may refer to Article 235(3) TFEU, pursuant to which the European Council decides procedural matters by a simple majority.

Consequences: withdrawing veto powers

Once the European Council determines a breach of the value of solidarity, the Council can decide by qualified majority to “suspend certain rights” in accordance with Article 7(3) TEU. This includes Hungary’s voting rights in both Council and European Council. There is no doubt that this is a significant intrusion in Hungary’s membership rights. Many Member States will be reluctant to set this example. This calls for restraint. At the same time, Hungary should be stripped of possible veto powers, not only in the CFSP, but also in other fields that might be used for purposes of extortion. The most important lever is the Union’s budget, such as the Own Resources Decision under Article 311(3) TFEU or the Multiannual Financial Framework under Article 312(2) TFEU, which require unanimity in the Council. Such decisions could be blocked by Hungary in order to extract concessions in other areas, such as the CFSP. As a precaution, voting rights under the “financial provisions” (Part VI, Title II of the TFEU) should be suspended as well. This sanction should be imposed for an indefinite period. Recurring extensions are a liability – that much we have learned from the CFSP misery. As such, the Council should rather review in regular intervals whether measures should be lifted, not whether they should be prolonged.

Politics: activating the “Weimar Triangle”

It is clear that the bottleneck of the entire procedure is the unanimous decision of the European Council under Article 7(2) TEU. This is precisely where the initiative of the German government is required. To muster political support Germany should activate the “Weimar Triangle”, a cooperation of Germany, France, and Poland to coordinate their approaches to European issues. This triangle is extremely powerful as these three states have very different spheres of influence across Europe (on such “regional groups” in Europe, see here). While France has, for instance, a special relationship with Italy since the Quirinal Treaty of 2021, Poland is part of the Visegrád Group, including the Czech Republic, Slovakia, and Hungary. Together, these three states can therefore activate further political support in different directions. At the same time, it must be determined which Member States could prevent a unanimous decision. One candidate is surely Slovakia. Beyond Slovakia, however, the frustration with Hungary is enormous. Neither Meloni’s Italy, nor any other right wing party in power, such as the Finnish, Dutch, or Croatian government seems to cover Orbán. When Orbán vetoed a political declaration to replace American military aid for Ukraine at an emergency meeting this March, the other 26 Member States – including Slovakia – moved forward without Hungary and published their own conclusions. The central question thus remains whether and how to persuade Fico.

Opportunity to sharpen conditionality

The second window of opportunity that should not be missed is to tighten financial conditionality. Currently, the EU has three financial conditionality regimes: the Rule of Law Conditionality Regulation which allows freezing EU funds when breaches of the rule of law risk affecting the EU’s financial interests; the Recovery and Resilience Facility, a part of “Next Generation EU”, which is linked to country-specific milestones related to rule of law standards; and the Common Provisions Regulation concerning the management of cohesion funds, which contains so-called horizontal enabling conditions that Member States must fulfil before disbursement. These conditions relate, inter alia, to compliance with the EU Charter.

As of today, approximately 20 billion EUR of EU funds for Hungary appear to be frozen under the three conditionality regimes (the numbers vary, for a detailed overview, see here). Around 1 billion EUR has been permanently forfeited, as Hungary failed to access the respective funds within certain time limits. Even if this financial pressure has not compelled Orbán to change course so far, he cannot hold out forever. Now that a new opposition candidate is on the rise, Orbán is hardly in a position to consolidate the country’s finances. Instead, he announced tax cuts, pushing public finances even further to the brink. As such, financial conditionality might require some more time and further sharpening to unleash its full potential.

In this sense, the Finish and Swedish Ministers for European Affairs called in a joint letter for extending the current conditionality regime to all values mentioned in Article 2 TEU. Especially the Common Provisions Regulation might become a sharper tool. Its Articles 9 and 15 as well as Annex III make the disbursement of these funds conditional upon the existence of “effective mechanisms … to ensure compliance with the Charter”. The Common Provisions Regulation is based on Article 177 and Article 322(1)(a) TFEU and can be amended through the ordinary legislative procedure. Article 322(1)(a) TFEU allows the EU legislature to adopt “financial rules which determine … the procedure to be adopted for establishing and implementing the budget”. This served also as legal basis for the rule of law conditionality regulation. According to the Court’s rule of law conditionality judgments, however, this legal basis is limited: it can only capture those violations of EU values that affect the Union’s sound financial management. There must be a “genuine link” between these breaches and the respective effect on the Union’s budget (see paras 147 and 176).

Still, there are three ways how to deal with this restriction. First, one may argue – in line with Court’s judgments – that the Union budget is the principal instrument “for giving practical effect, in the Union’s policies and activities, to the principle of solidarity”. This requires “mutual trust between the Member States in the responsible use of the common resources”. That mutual trust, in turn, is based “on the commitment of each Member State to comply… with the values contained in Article 2 TEU” (see para 129). As such, there is a direct link between the budget, mutual trust, and compliance with all EU values.

Second, we should explore possible links between corruption and democracy. Beyond independent courts and effective anti-corruption measures, political science has demonstrated that a high level of democracy, especially democratic accountability, is an essential factor to reduce corruption. The same applies to a free press, academia and civil society, which serve as additional checks on executive power. As such, there is a “genuine link” between democratic concerns and the Union’s budget.

Third, one may adjust the objectives of the Union’s structural funds. Their objectives are laid down by the EU legislature under Article 177 TFEU. Considering the Union’s central “aim to promote its values” as outlined in Article 13(1) and Article 3(1) TEU, the legislature could redefine the central objective of the structural funds: a development of the Member States’ societies in compliance with the Union’s values in Article 2 TEU. Moreover, that provision allows to adopt “general rules applicable to them and the provisions necessary to ensure their effectiveness”. The funds’ “effectiveness” will require securing their objectives and thus the protection of EU values. Accordingly, one could adopt a certain value conditionality directly based on Article 177 TFEU.

Seizing the momentum

The time to tackle the Union’s “Orbán problem” is now. The Union and its Member States should seize the current momentum by focusing on two approaches: increasing financial conditionality and reviving Article 7 TEU. With a few tweaks, Article 7 TEU can become operational. The Commission’s strategy should be coupling restraint with boldness. On the one hand, it should advance a thin proposal under Article 7(2) TEU, limited to breaches of solidarity and threats to the Union’s security. Moreover, stripping Hungary of its voting rights should be limited to what is absolutely necessary to prevent further extortion. Such restraint might calm some Member State governments, which are afraid of setting a “dangerous” precedent. On the other hand, the Commission should force the Member States to take a stance. Hence, it should combine its proposal under Article 7(2) TEU with the offer for an interinstitutional agreement in which the European Council agrees to take a vote within a limited time frame. The European Council can consent to such an agreement by simple majority. This would mean: Member States can no longer avoid taking a stance – the time to make a tough choice has come. To succeed, a concerted effort of the “Weimar Triangle”, Germany, France, and Poland, seems essential. This should be a top priority of any incoming German government.