July 29, 2021

“Merkel capitulated to Hungarian and Polish extortion”

The European Union faces an existential threat, and yet the leaders of the EU seem to be convinced that it can be dismissed out of hand: as evidenced by the compromise reached on Thursday 10 December.

The kleptocratic regime of Prime Minister Viktor Orban in Hungary and, to a lesser extent, the illiberal Law and Justice (PiS) government in Poland, brazenly challenge the values ​​on which the European Union was built. Treating their challenge as a legitimate political position, which deserves to be compromised, will only add – massively – to the risks the EU faces today.

I recognize and understand the enormous pressure that has been placed on German Chancellor Angela Merkel. She has been German Chancellor for 15 years and is now approaching retirement, scheduled for September 2021. French President Emmanuel Macron being temporarily distracted by the issue of secularism and other serious security concerns in France, Merkel has become the sole leader of the EU.

I also understand why the German Chancellor does not want a country, Hungary, to announce its intention to leave the EU in her care. This is apparently what Orban has been preparing to do in recent days, as he cannot afford to expose the extent of his regime’s corruption, which would inevitably have led to demanding compliance with ” the rule of law ”as a condition for the disbursement of Union support funds.

Viktor Orban’s regime stole and embezzled vast sums of money during its decade in power, including European funds, which should have benefited the Hungarian people. He cannot afford to put a concrete limit on his personal and political corruption, for these illicit proceeds are the grease that keeps the cogs of his regime running smoothly and his followers to keep out of control.

Threatening to torpedo the EU’s finances by vetoing its budget was a desperate gamble on Orban’s part. But it was a bluff that should have been denounced. Sadly, Merkel has, it seems, succumbed to Hungarian and Polish extortion.

As I write, it seems clear that Merkel has negotiated a compromise with Orban and Poland’s de facto leader, Deputy Prime Minister Jaroslaw Kaczynski. Germany’s deal with the two rogue EU states, however, is the worst possible scenario. The text of the proposed compromise, which is to be incorporated into this week’s final European Council declaration, has three fundamental flaws.

  • First, the declaration changes the letter and spirit of the regulation which was approved by the EU institutions on November 5, considerably weakening the conditionality of the rule of law. Neither the European Commission nor the European Parliament, let alone the national governments which have made the integrity of the regulation their main concern in the European Council, should allow themselves to be done in this way.
  • Secondly, certain provisions of the agreement serve to delay the implementation of the rule of law conditionality by two years. It would be a real coup for Orban, because it would postpone any possibility of action after the next Hungarian parliamentary elections scheduled for 2022. This reprieve would give Orban’s Fidesz party ample time to amend Hungarian laws and constitutional provisions , in order to redefine what constitutes “public funds” in Hungary. Thus, Orban could channel the looting of public bodies to private “foundations”, controlled by his friends. The main victims of the deal Merkel made with Orban will be the Hungarian people.
  • Thirdly, with this proposal for a declaration, the European Council is exceeding its authority: it limits the competence of the European Commission to the interpretation and application of agreed community legislation. This is a dangerous precedent because it reduces the legal independence of the Commission. This compromise seems to violate the Treaty on European Union, at least in spirit.

The deal, as it appears, is awful. It ignores the explicit wishes of the European Parliament. But due to the urgent need to use the recovery fund set up to face the Covid-19 crisis (750 billion euros) the European Parliament could very well approve it.

All I can do is express the moral outrage that must be felt by those who believe in the EU, as the protector of European and universal values. I would also like to warn that this compromise risks seriously damaging the hard-won confidence, in particular thanks to the creation of the recovery fund, by the institutions of the Union.


George Soros is president of Soros Fund Management, as well as of the Open Society Foundations. A pioneer in the hedge fund industry, he is the author of numerous books, including “The Alchemy of Finance, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What it Means”, and more recently “In Defense of Open Society ”.