Hungarian Finance Minister: EU subsidies for Ukrainian refugees not enough
The Hungarian Finance Minister has warned that EU subsidies to cope with Ukrainian refugees cover only two percent of the costs.
Published: April 29, 2022, 8:56 am
The Hungarian government is pushing for a larger contribution from the European Union to the financial burdens related to the current influx of refugees from Ukraine.
This is what the Hungarian Finance Minister Mihály Varga admitted on Facebook. According to his calculation, Hungary has spent 600 billion forints (1,6 billion euros) to protect its southern border and 40 billion forints to deal with the Ukrainian refugee situation, while the EU grant covers just two percent of the immense costs.
Varga’s statement should be seen against the backdrop of a recent EU Council decision that allows member states to receive a total of 3,5 billion euros (about 1 300 billion forints) more this year to facilitate the reception of refugees from Ukraine. The EU decision allows for pre-financing under the Reconstruction Assistance for Cohesion and Areas of Europe (REACT-EU), one of the largest post-pandemic recovery programs related to cohesion policy funds and the Fund for European Aid to the Most Deprived (FEAD).
The European Banking Authority (EBA), which oversees banks in the EU, has meanwhile issued guidelines for financial institutions to give refugees from Ukraine access to basic financial products and services, such as bank accounts and insurance policies.
Gunnar Beck, economic policy spokesman for the AfD in the European Parliament, said rules should also apply to refugees from Ukraine “It is important that Ukrainian refugees can open a bank account and take out insurance with European banks for the time they are admitted to the EU. However, EU anti-money laundering rules should be fully complied with.
The EBA has now outlined the flexibility of anti-money laundering rules when dealing with Ukrainian customers. Financial institutions are not required to obtain passport information to verify the prospective customer’s identity. Circumstantial evidence that the customer is a refugee from Ukraine is sufficient.
Notably, refugees from Ukraine include not only Ukrainian citizens, but also third-country nationals who lived in Ukraine before the outbreak of war.
“Ukraine is one of the most corrupt countries in Europe, with the fourth poorest population in Europe. The Ukrainian corruption elite is also being helped here to bring their assets to safety in the EU. Years ago, President Zelensky already transferred at least 41 million dollars to the Caribbean. How he got the money remains uncertain,” said the German opposition politician.
“We must prevent terrorists from using the existing flexibility of the financial transparency rules by traveling through Ukraine or forging papers that show that they were in Ukraine before the outbreak of war.”
The situation also creates a paradox. As passport information is no longer a prerequisite for obtaining simplified customer due diligence, it has become impossible for banks to apply the assessment criteria provided by the EBA to check whether a prospect falls under the simplified customer due diligence rules.
“The mere fact that someone is a refugee from Ukraine should not be enough to exempt them from strict EU money laundering rules. We must ensure that criminal money is not laundered through European bank accounts of refugees from Ukraine. The current rules cannot offer this guarantee,” said Beck.
Brussels to go ahead with ‘rule of law’ proceedings against Hungary
The next spat is looming between Brussels and Hungary after the EU Commission launched the long-awaited “rule of law” proceedings against Viktor Orban’s government. Hungary is accused of “corruption” and problems with public procurement, among other things.
The procedure had already been announced by EU Commission President Ursula von der Leyen at the beginning of April. In the course of the new sanctions mechanism that has now been triggered, Hungary is at risk of billions in cuts in EU funds.
In addition to Hungary, Poland is also facing a “rule of law” procedure. The two countries had already unsuccessfully appealed to the European Court of Justice.
To date, both have received billions from the EU community budget every year. However, it will still be some time before Hungary actually has funding cut from the EU budget. This would also require the consent of at least 15 EU countries with at least 65 percent of the EU population.
Budapest can now comment on the EU’s allegations and, if necessary, propose remedial measures. The EU Commission then takes this into account when making its decision. The Hungarian Chancellery Minister Gergely Gulyas reacted negatively to the procedure and spoke of a “mistake”.
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