EU: EU Commits To 'Fair' Conditionality Mechanism; No Immediate Funds To Hungary
Reports slowly emerging about the nature of the deal reached between senior EU leaders and Hungarian PM Viktor Orbán. The Guardian reports that "As part of today’s deal, leaders agreed to state in their summit conclusions that “the European Council recalls its December 2020 conclusions on the application of the conditionality mechanism.” The conditionality mechanism is what allows the EU to suspend funding to member states over rule of law issues.
- Guardian: "...The mechanism was later triggered to suspend part of Hungary’s EU funding. In the 2020 conclusions, leaders stressed that “the application of the conditionality mechanism under the Regulation will be objective, fair, impartial and fact-based, ensuring due process, non discrimination and equal treatment of Member States.”
- Essentially it would seem that Orbán has made the EU re-state its previous commitment that the conditionality mechanism would be used in a fair and impartial way.
- Crucially, it does not indicate that any funds will be released immediately in exchange for Hungary dropping its veto. Nevertheless, it could emerge in the coming days or weeks that a section of the currently frozen EUR23bn in EU funding will be released at some point.
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Nomura write “we saw an uptick in Eurozone lending data in November, the second consecutive month of improvement. However, lending remains subdued versus what was seen prior to the hiking cycle, and we don't expect to see a material near-term rebound in net lending.”
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