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Hungary threatens EU's COVID-19 recovery financing over rule of law

BRUSSELS/BUDAPEST (Reuters) - Hungary has refused to grant final approval of the European Union’s planned 750 billion euros (669.5 billion pounds) borrowing to spur economic recovery in the bloc from the coronavirus pandemic without guarantees on a linked mechanism on the rule of law, diplomatic sources said.

Prime Minister Viktor Orban has long been at loggerheads with the EU over democratic checks and balances, and stands accused of undermining the independence of the judiciary, media, academics and advocacy groups in Hungary.

Under a historic deal, the EU agreed last July that its executive would borrow 750 billion euros on the market to top up a trillion euros worth of spending under the bloc’s joint budget in 2021-27 to help the continent recover from the COVID-19 slump.

The agreement between the 27 member states still requires approval by the European Parliament, as well as many national parliaments across the EU.

The package would also link access to EU funds to respecting democratic principles, which Orban now wants to ensure would not hurt him in order to grant Hungary’s final approval, according to the sources.

“Hungary has said that, to pass that decision, they want to sort out the rule of law,” one senior EU diplomat told Reuters on condition of anonymity.

Hungary’s Justice Ministry on Thursday said that the July deal was an overall package and that “none of its components can be decoupled or removed from the package and decided or amended separately from other components.”

“Nothing is agreed until everything is agreed,” it added.

While the European Parliament wants to toughen the rule of law conditions on obtaining EU funds, countries like Spain and Italy that have been hit hardest by the pandemic demand smooth ratification to ensure the money starts flowing swiftly.

Reporting by Gabriela Baczynska and Krisztina Than; editing by Jonathan Oatis

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