As Hungary moves to unlock EU Cohesion money, the Horizon Europe impasse continues

Hungary is making fresh efforts to unlock some of the €22 billion in Cohesion funds that the EU is currently withholding because of various rule-of-law concerns, but the negotiations over the block on Horizon Europe and Erasmus+ funding for some institutes remains at a standstill and is now said to have “damaged” the reputation of unaffected institutes.

The EU banned more than 30 Hungarian institutes, including 21 universities, from receiving Erasmus+ and Horizon Europe funds over concerns about their management structures following a government-directed overhaul that saw management transferred to public trust foundations, placing a great deal of control in the hands of boards of trustees who were initially hand-picked by the government.

There are technical meetings to resolve the funding block between the sides, but no timeline has yet been set out.

Affected Hungarian institutes are reluctant to discuss the ban in public, but six universities have lodged appeals with the Court of Justice of the European Union (CJEU).

Now there are concerns about the effect this measure is having on Hungarian institutes that are not included in the ban.

As one example, András Benczúr, scientific director of the Artificial Intelligence National Laboratory (MILAB) at Hungary’s Institute for Computer Science and Control (Sztaki), which is not affected by the funding ban, said the institute is nonetheless having to deal with the fallout.

“Every [European] project we’re involved in, even ones that have been running for years, are asking us to confirm that we’re still eligible,” Benczúr said. “There is a lot of suspicion.”

It is taking considerable time and effort to assure their partners and provide the relevant proof, including in some cases, a letter from the Hungarian government.

The impact can also be seen in new grant applications. Benczúr said in several cases the coordinators did not understanding that the EU ban does not affect all Hungarian research institutes or universities.

“The biggest problem is not financial, it's losing our contacts and collaborations,” Benczúr said. “We’re getting more and more isolated.”

The difficulty in getting the message across is compounded by the fact that institutes affected by the ban can still apply for EU projects as associated members, with the Hungarian government responsible for footing the bill. But this wrinkle is also little understood on Europe’s research scene.

Incomplete information

At the heart of this problem is a lack of clarity in the EU’s communication, Benczúr claims. In April, a message appeared on the EU funding portal warning project coordinators of disruption to their grants if they are working with certain Hungarian entities.

The notification does stipulate it only relates to Hungarian universities operating under the public trust foundation model, but for Benczúr this is not clear enough. He wants to see the affected Hungarian institutes listed.

When the message first appeared on the tenders portal, the Budapest University of Technology and Economics (BME) flagged the issue to Science|Business. It is not on the banned list, but following the message the university received at least twenty emails from concerned partners asking if the university is still eligible to receive EU funds. At the time BME called for a list of affected Hungarian institutes to be included in the Commission’s FAQs section. In the FAQ section, there is a question asking: What are the entities ‘maintained’ by public interest trusts concerned by the Council Implementing Decision 2022/2506?

The answer is shown in the box below.

 A Commission spokesperson told Science|Business that the FAQs, “make clear that only public interest trusts and entities maintained by them are concerned by the Council measures,” and that the rules of the ban have, “also been repeated at several outreach events which took place over the last months, including in events including the Horizon Europe National Contact Points.”

Unlocking Cohesion funds

While progress on the Horizon Europe ban is at an apparent standstill, Hungary is making moves to unlock some of the €22 billion in Cohesion funds, which have been withheld by the Commission since last December. This includes €1.5 billion designated to improve Hungary’s research and innovation performance.

At issue here are concerns that judicial independence in the country is not in line with the EU’s Charter of Fundamental Rights. There are also concerns about a child protection law that the EU views as anti-LGBTQ+, and about academic freedom and asylum laws.

To complicate matters, EU member states voted in December to suspend €6.3 billion of the Cohesion funds due to Hungary until it implements 17 remedial measures related to rule of law concerns, and the country is also blocked from receiving €5.8 billion in loans and grants from the EU’s post-Covid recovery package, until it implements 27 ‘super milestones’, which include the 17 remedial measures.

In July, Hungary submitted evidence to the European Commission in a bid to allay the concerns over judicial independence. The Commission is now awaiting the response to further questions sent to Hungary on 26 September, according to a Commission spokesperson.