Irregularities in the European Union Cohesion Policy – Hungarian Experiences and Lessons Learned

Abstract

Using European Union funds involves a complex process; Member States must adhere to the wide-ranging EU and domestic legislation, non-compliance can lead to irregularities. In addition to the accordance with the letter of the law, the general EU budgetary principles, sound financial management, in particular, must also be given full consideration. The paper essentially focuses on the development and effectiveness of the legal-institutional system related to irregularities, while the approach Hungary has adopted to handle the various types of irregularities is discussed, too. The research also assesses how irregularities are dealt with at the EU level and explains the contribution of EU audits to legal uncertainties. Particular attention is placed on the regulatory controversies implementing entities have long struggled with and the author provides commentary on the effective handling of these issues. It is a fact that the Hungarian institutional system (Nyikos, 2012) was not fully-equipped to detect irregularities at the start. Although improvements have been made and recognised since then, the current system still suffers from unclear rules and inconsistent judicial interpretations.
The use of conditionalities in cohesion policy has been significantly extended lately using macroeconomic conditionality, ex-ante conditionalities and infringement conditionality. (Nyikos, 2014) In the legislative proposals on the 2021–27 financial period, the European Commission proposes a new one, most notably: the so called rule of law conditionality (COM[2018] 324 final); however, a lot of political discussions concentrate on the clarity and objectivity of it, even though cohesion policy conditionalities have always contained the obligation of the proper functioning of the institutions – including the courts.