Hungary's Presidency of the Council of the European Union and the Impacts of the 2024 EU Elections

Background  

From July 1 to the end of 2024, Hungary will be taking the rotating presidency of the Council of the European Union. Will Budapest tone down its political differences with the European Union members as Hungary will be in charge of the EU’s policy-making process for six months? Celebrating 25 years of NATO and 20 years of EU membership in 2024, Hungary is up for a political profile update under the Fidesz-led government. Fidesz is a Hungarian Civic Alliance, a right-wing populist and national-conservative political party in Hungary, led by Viktor Orbán. As Hungary faces outstanding domestic issues of high inflation and economic stagnation, the country faces another serious problem: isolation from the EU. A backsliding democracy and a poor rule of law record threaten Hungary’s future in the European Union, where its member states pronounce Hungary’s leader as an autocrat and thus an outcast of the Union.  

The EU elections are coming up this June 6–9, and for the first time ever, a municipal election in Hungary will be held simultaneously. Orban’s government is challenged to balance out its grand strategy for the EU as President of the Council as well as national level leadership back in Budapest. Given EU’s club of democracies critically looking at Hungary’s commitment to common EU values and policies, the most important question right now is how ready can Hungary be for the potential challenges ahead regarding EU governance and rule of law.

In Focus: The Council of EU & Hungary’s Rotating Presidency for the Second Half of 2024: 

• What is the Council of the EU? Why It Matters? 
• How Will the EU Election Results Impact the EU? 
• What Policy Areas the Hungarian Government Plans to Prioritize? 
• Are the EU Rule of Law Mechanism and Conditionality Negatively Impacting Hungary? 
• The Spectrum of Challenges Awaiting the EU and Hungary?  

What is the Council of the EU? Why it matters?

Informally known as the Council, the Council of the EU is the institution where government ministers from each EU country meet to discuss, amend and adopt laws and coordinate policies. The ministers are endowed with the authority to commit their governments to agreed actions in the meetings. Together with the EU parliament, the Council is the main decision-making body of the EU.

The Council in Brief:  

• Role: Coordination of EU policies, adoption of EU laws, and the voice of EU member governments. 
• Members: Government ministers from each EU country, according to the policy area to be discussed. 
• President: Each EU country holds the presidency on a 6-month rotating basis. 

How Will the EU Election Results Impact the EU? 

In March 2024, a European election survey conducted by Ipsos for Euronews in 18 countries highlights the projected composition of the next European Parliament and voting intentions by country. The key findings indicate 3 main points:  

1. The radical right would make significant progress in the European Parliament, gaining more than one-fifth of MEPs for the first time - but the extent of its increase would vary greatly from country to country. 
2. Only a coalition between the conservatives, social democrats and liberals could have a stable majority - although alternative ad hoc majorities could be found on some legislation. 
3. However, this projection is subject to several unknown factors, including the attitude of MEPs from the non-attached group and changes in groups after the elections.

What Does This Projection Mean? 

There are two political groups that will potentially increase their representation in the EU Parliament:³ 

1. The Identity & Democracy (ID): 81 members of European Parliament (MEPs)
2. The European Conservatives & Reformists (ECR): 76 MEPs  

This is important because if the results of this survey hold, the radical right’s progression at European level is clear in the long-run. The MEPs from right-wing Eurosceptic and far-right groups in the EU Parliament are as follows:

• 2004: 8.7%
• 2009: 11.8%
• 2014: 15.7% 
• 2019: 18%
• 2024: 21.8% (projection)

What do the changes mean for the EU Parliament Composition? This means every victory for the Eurosceptics will come at the expense of the Christian Democrats and Conservatives (EPP) and the Social Democrats (S&D) groups. The prediction indicates that the EPP, which had 36.6% of the MEPs in 2004, is expected to represent only 24.6% after the June elections while the S&D would go down from 27.3% to 18.9% of the seats in 20 years. Overall, the leading political parties by country give a glimpse of the composition of the EU Parliament, as shown below: 

In the case of forging coalitions within the EU Parliament, there are six scenarios to envision the types of alliances between groups with a majority vote, indicated below. The prediction from the survey highlights that only coalitions including the EPP, S&D, and Renew groups would have a majority of seats. Rightwing coalitions (EPP, ID, ECR), Euro-critic coalitions (ID, ECR, NI, The Left) or even left-wing coalitions (S&D, Greens/EFA, The Left) would not be enough to pass bills. In any case, the EPP and Renew groups will be decisive in shaping majorities in the next Parliament. 

The Potential Coalitions in the Next EU Parliament

Policy Priorities for the EU in 2024-29 

With the current power balance expected to shift in favor of more right-wing forces, major changes are expected regarding the direction of policies decided by the Parliament which will shape EU politics over the next five years. Most policy issues, by priority, will center around the following:⁴ 

1. Trade 
2. Security 
3. EU enlargement  
4. Energy 
5. Cyber policy 
6. Health policy 

Can Hungary Affect Policy Change through the Parliament and the Council of the EU?  

As depicted below, the Fidesz party may secure the majority of votes in the EU elections by an estimated 47.6% (21 seats). Considering the party's intention to align with the European Conservatives and Reformists Group (ECR), a right-wing group projected to emerge as the third largest in the EU, the Fidesz party may have the capacity to influence policy decisions at the parliamentary level.  Additionally, as President of the Council, Victor Orban's Hungary can set the agenda at the Council of the EU that is consistent with European Commission proposals.  

What Policy Areas the Hungarian Government Plans to Prioritize? 

The rotating presidency of the Council of the EU will put Hungary in a strategic position to decide the EU’s policy-making process for six months. However, it should be remembered that Hungary’s turn comes at a turbulent time: right after the formation of the new European Parliament and amid negotiations on the make-up of new European Commission. This is important to highlight because usually the EU’s most important institutions after elections traditionally have little room to work on real policies. For instance, in the second half of 2019, the Finnish presidency only reached agreement in the Council on 18 dossiers, compared to around 128 under Austria (second half of 2018).⁵ Given all that, Hungary faces an exceedingly challenging task of balancing its political stance domestically, within the EU, and globally at the same time.

Hungary may adhere to the overarching objective envisioned by Victor Orban, which is to serve as an intermediary between Eastern and Western powers while avoiding any allegiance to particular blocs. EU member states are irritated by this political stance, as they believe Hungary's membership in the EU is accompanied by unchecked commitments to the Union. Thus, the majority of EU members interpret Hungary's open or liberal policies toward Russia and China, for instance, as anti-EU policies. As a consequence of this disagreement between Hungary and EU coupled with Hungary's decade-long breach of rule of law, the country has been subjected to significant EU sanctions, which have had an adverse effect on the Hungarian economy. This will play out in the Council where Hungary will prioritize reforms in the policymaking process, such as EU’s cohesion policy- which aims to create economic and social cohesion and reduce disparities in regional development. The following categories highlight what Hungary could potentially do through the Council while in the leadership seat:

1. Local: economic policy 

At the state level, Hungary can influence changes in economic policy through the Council's policymaking process, primarily to impact:⁶ 

• skyrocketing inflation 
•  economic stagnation  
• growing international isolation.

2. European Union: Cohesion policy

The main focus will center around influencing the priorities of the next Commission. Hungary can do this by providing written guidance to the Commission on:⁷  

• specific policy areas (i.e. economic stagnation)  
• promoting the adoption of various Council conclusions (i.e. immigration policies) 
• Laying out the Council’s position on various issues- most notably on cohesion policy- a key area of interest for Hungary. In light of this, Hungary will have real value to add to succeeding cohesion policy across the EU.  

Are the EU Rule of Law Mechanism and Conditionality Negatively Impacting Hungary? 

Penalties and blockades have been the EU’s number one strategy to sanction Hungary for breach of Rule of Law and adherence to democratic principles. The fundamental issue is that democracy, human rights, and the rule of law are under increasing pressure in Hungary, which subjects the country to the Union’s rule of law mechanism and conditionality. It is not clear how Hungary’s presidency of the Council will impact the current situation between the EU-Hungary, however; one thing is clear and that is the impact of the EU’s rule of law and financial conditionality on budget allocations and funding for Hungary. This is because the more a member state is dependent on EU funds, the greater the pressure the EU can exert through its rule of law instruments. 

Over the past three years, Hungary has had a total of over €30 billion in EU funds frozen due to serious rule of law deficits. In fact, the EU’s conditionality mechanism has been applied to Hungary for the first time in the history of the Union. Hungary’s non-compliance with the EU Charter of Fundamental Rights, which must be taken into account when implementing EU funds, has led to serious frictions between EU and Hungary. Due to the financial blockades, Hungary will lack an average of almost €9 billion in EU funds in its national budget between 2024 and 2026.⁸ This is highly problematic for the government of Prime Minister Orban which is currently dealing with a staggering 27% high inflation⁹ across the country.

In reaction, Orban’s government has backlashed through blocking important decisions at EU-level to pressure the EU into unblocking the funds. This is possible due to the EU’s vested veto power in the member states over security and foreign policy issues where the rule of unanimity applies. Through exercising veto power, PM Orban has been successful in restricting the EU’s ability to act politically through its blockades. For instance, Hungary blocked several important decisions, which later voted for only after getting the EU to a point of concession, such as: 

• Reform of EU migration policy  
• Sweden's accession to NATO  
• EU aid packages to Ukraine (i.e. Dec 2023) 

 The European Commission had to free up 10 billion euros from the funds which had been frozen under the rule of law conditionality sanctions one day before the Council voted on 1 February 2024, to start Ukraine’s EU accession negotiations.¹⁰ Orban had threatened to veto it but at the time of voting did not. Thus, setting precedent, the rotating presidency of the Council will vest even more power in Hungary to attain more financial and policy concessions from the EU.¹¹  

The Spectrum of Challenges Awaiting the EU and Hungary

Given the right-wing surge according to poll results, a rightward swing could drastically shift EU policies. This is what Orban awaits to tilt the EU in his direction. This will introduce a new wave of challenges for the EU, especially as Hungary exercises its institutional powers, such as during the rotating presidency of the Council or even more concerningly, during unanimity voting. Thus, the challenge for the EU is not just to protect itself from becoming hostage to a potential blackmail situation by Hungary, but also to find a mechanism where the institutional conditions for the EU’s capacity to be blackmailed, be removed in the long run.¹² This can only be done through reforming its decision-making procedures and reducing the veto options. However, given the political context of the EU currently, the EU’s inability to make effective use of its rule of law instruments indicate that Hungary, or any other member state, can at some point use their unanimity voting rights and block the Union from reaching a decision.   

At the same time, a successful presidency for Hungary, which Hungary can achieve through concrete advances in agenda setting and legislation, can help improve the profile of the country across the Union. For this to take place, Hungary must set aside its difference with the EU member states and reach consensus across the Council for the duration of Hungary’s term of presidency. In any case, the EU, after the June elections and with Hungary’s upcoming presidency of the Council, will have a different structure and different priorities. For an optimal outcome, both sides must reach common ground to decide on key policy issues despite their strained relations.

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2. “The political groups,” The political groups, Read more.  ↩︎
3. Ipsos. “A European election survey three months ahead of the June 2024 European elections.” Euronews, March 2024, Read more ↩︎
4. the German Council on Foreign Relations. “Priorities for the next EU Commission (2024–2029),” DGAP, Read more.  ↩︎
5. Internationale Politik Quarterly. “The European Union’s Hungary Problem,” March 13, 2024. Read more.  ↩︎
6. Balkan Insight. “Hungary IN 2024: TWO ELECTIONS AND AN EU presidency.” Jan 12, 2024, Read more ↩︎
7. Tibor Navracsics – Laura Schmidt – Balázs Tárnok. “On the Way to the Hungarian EU Presidency: Opportunities and Challenges for the Hungarian EU Presidency in 2024 in the Field of EU Policies.” Ludoviko University Press. 2023, Read more ↩︎
8. Internationale Politik Quarterly. “The European Union’s Hungary Problem,” March 13, 2024. Read more.  ↩︎
9. Chatham House. “The future of Europe: Strategic perspectives of the incoming Hungarian EU Presidency.” May 8, 2024, Read more  ↩︎
10. Liboreiro, Jorge. “Brussels releases €10 billion in frozen EU funds for Hungary amid Orbán’s threats.” Euronews, December 13, 2023. Read more.  ↩︎
11. Heinrich Böll Stiftung | Prague Office - Czech Republic, Slovakia, Hungary. “How the Orbán administration’s political approach to the EU affects the upcoming rotating presidency | Heinrich Böll Stiftung | Prague Office - Czech Republic, Slovakia, Hungary,” February 27, 2024. Read more.  ↩︎
12. Internationale Politik Quarterly. “The European Union’s Hungary Problem,” March 13, 2024. Read more.  ↩︎

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