Defiant Orban Says Hungary Won’t Blink in EU Budget Standoff

(Bloomberg) -- Hungary’s prime minister said he won’t end his block on the European Union’s $2.2 trillion budget and coronavirus-rescue package unless Brussels relents in tying spending to upholding democratic values, denting hopes for a deal at a summit next week.

Viktor Orban said an agreement between Budapest and Warsaw to obstruct any proposal that violates each others’ interests still stands after Poland’s government sent mixed signals over a possible solution to the stalemate.

The pair have repeatedly locked horns with the EU in recent years over adherence to the rule of law, exposing them to potential funding cuts under the new conditions.

“Hungary is adamant that the two things have to be separated,” Orban said Friday.

The financing package must be passed by year-end or the bloc will resort to an emergency budget, with the veto from Budapest and Warsaw concentrating minds on a workaround solution.

With Germany’s Angela Merkel holding the EU presidency and running diplomacy, leaders are set to gather on Dec. 10. Their plan would be to cut Hungary and Poland out of the 750 billion-euro ($908 billion) coronavirus-rescue fund, effectively stripping them of the power to stop the flow of aid to the continent’s battered economies try to stave off a double-dip recession.

Respecting Rules

“If they don’t respect the rules in our game on the European level then we do it without them,” Manfred Weber, the head of the European People’s Party caucus in the European Parliament, told Bloomberg TV Thursday.

Investors are so far signaling that they expect the EU to find a way to resolve the budget problems.

Orban, however, rejected a proposal floated by a deputy of Polish Prime Minister Mateusz Morawiecki that a separate declaration from EU leaders on how to interpret the contested rule-of-law mechanism may assuage the government.

Read more: EU Plans to Skirt Veto on Virus Fund; Poland Sends Mixed Signals

That comment clashed with an earlier statement from Morawiecki, who said Poland doesn’t need the EU money and can borrow funds on its own. The two eastern European countries, which are net recipients of EU funding that’s helped transform their economies since the fall of communism, could lose a combined 180 billion euro ($218 billion) from the multi-year budget and the relief fund.

“We agreed with the Poles on a joint position, to not accept anything that’s unacceptable for the other,” Orban said. The Polish deputy prime minister’s compromise proposal was “unacceptable” for Hungary, he said.

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