Hungary rejects 'blackmail' over EU funds

By Gergely Szakacs

BUDAPEST (Reuters) - Hungary responded angrily on Thursday after the European Commission proposed cutting development funds to countries deemed to have undermined the rule of law, saying it would not yield to "blackmail".

The EU's executive announced the plans in proposing a joint budget for 2021-27 on Wednesday, a move that could cost Hungary and Poland, two of the biggest net recipients of EU aid, millions of euros.

The funds have been a major driver of investments in Hungary over the past years, contributing to a rise in economic growth to 4 percent in 2017, the highest level in three years.

The Commission did not specify how much of that funding might be in jeopardy. It said any measures taken would be proportionate to the threat a country's actions posed to the rule of law.

"There are treaties in force in the European Union that clearly specify the rights and obligations of EU member states," Hungarian Foreign Minister Peter Szijjarto told a news conference.

"We do not agree with any proposal that would provide the potential for blackmail of anyone with regard to the payment of EU funds that are due to be given to countries based on the treaties," he said.

The Commission has accused Prime Minister Viktor Orban's right-wing government of undermining the independence of Hungary's courts and curbing media freedom.

The European Anti-Fraud Office is also investigating projects run by a company once controlled by Orban's son-in-law. Critics say Orban has presided over a downward slide in Hungary's global corruption rankings.

Orban was re-elected in a landslide last month in an election campaign dominated by his fierce anti-migrant platform.

Szijjarto, who will remain Orban's foreign minister in the new cabinet, rejected the view that EU funds were "humanitarian aid" provided to Central Europe. No subjective criteria should be introduced into how they are disbursed, he said.

"We have opened up our markets and Western European companies have pocketed enormous profits in Central European markets," he said.

"This is not a one-way street that those in the West are being good lads and give us some EU funds. This is a two-way street and everybody must meet their commitments," he said.

Siding with France, Szijjarto added that Hungary would oppose any reduction in agricultural subsidies that could hit its sizeable farm sector.

(Reporting by Gergely Szakacs, editing by Larry King)