Part I — Situation overview

A deal that has dragged on for weeks reached a turning point: the biggest economic-policy stake of the Tisza cabinet, which took office after governance running since 2010 — the release of the frozen EU (cohesion and recovery) funds — reached a concrete sticking point by the end of May 2026. On 22 May 2026 Finance Minister András Kármán negotiated the schedule for drawing down the funds with the finance leaders of the EU member states at the ECOFIN and Eurogroup meeting in Cyprus, while according to HVG’s information the people of Prime Minister Péter Magyar and Commission President Ursula von der Leyen could sign a political framework agreement within a week. Portfolio put it more sharply: in their view the two sides’ negotiators had been “set on a collision course”, and “the release of EU money has turned into trench warfare”.

In recent days the dispute has shifted to the substantive conditions. Following Euronews, the Hungarian outlets (Telex, 24.hu, Mandiner) reported in unison that the two main points of contention are pension and tax reform. According to 24.hu’s summary, Hungary must meet 27 so-called super-milestones and more than 368 individual milestones for the full repatriation of the funds — and the Commission counts among these the structural, sustainability-oriented overhaul of the pension system and taxation. The government’s position is that fulfilling this by the end of August, cited as the deadline, is practically impossible: Péter Magyar set out the “red lines” of the negotiation to von der Leyen in a letter last weekend, and publicly ruled out abolishing the special taxes (windfall taxes) levied on the energy and financial sectors. His team has nonetheless signalled that Hungary in principle remains committed to pension reform, only that pre-deadline implementation is unrealistic given the weak fiscal position and the tight timeframe. The Commission’s vice-president, Valdis Dombrovskis, by contrast spoke of “full support” in the transition — while the pro-government Magyar Nemzet forecast “big smiles, but hardly a breakthrough”.

MIAK’s reading is that anyone who interprets the dispute in a victory-defeat logic misunderstands its nature. The matter of the frozen funds is not a prestige battle but a question of compliance and timing: the stake is that public money be used in a corruption-free and measurable way, and that the structural reforms be driven by their impact, not by the negotiating calendar.

Part II — Literature audit

Before turning to MIAK’s concrete proposals, it is worth fixing the scholarly framework within which the question can be interpreted. In Why Nations Fail, Daron Acemoglu and James A. Robinson (economists, leading authors of institutional economics, awarded the 2024 Nobel Memorial Prize in economics) show that the precondition for lasting economic growth is an inclusive institutional system — protection of property rights, predictable rules, and limited, shared political power; extractive institutions, by contrast, line the elite’s pockets at the expense of the majority. In this frame, EU conditionality — that is, tying the release of funds to anti-corruption and institutional conditions — is not a restriction of Hungarian sovereignty but precisely the external reinforcement of inclusive institutions. Thomas Piketty (French economist, leading researcher of the long-term data on wealth inequality) connects to this with another thread: in his view progressive taxation is an effective tool, but it presupposes “powerful coordination at the international level” — which is exactly why the tax-reform condition is not questionable in itself, but in how it fits into an EU framework. The detailed literature treatment — author by author, with quotations — can be found in section 6.4 Literature in detail.

Part III — MIAK’s concrete proposal

MIAK proposes three measurable measures that move the dispute from the arena of political skirmish into the arena of compliance and transparency.

3.1 Bilateral milestone schedule, with public delivery-tracking (within 60 days)

The government and the Commission should set out, in a joint, itemised and public schedule, which of the 27 super-milestones and the 368+ individual milestones are fulfilled by what date — and what each milestone means concretely. The engine of this is the A8 cohesion-accountability programme point: every project above HUF 500 million should start with a mandatory, independent cost-benefit analysis, a public data sheet and a clawback clause. In Acemoglu and Robinson’s inclusive-institution framework (see 6.4.1) this is not a slowing-down of the funds but a guarantee of the predictability of their use. The schedule creates bilateral accountability: delivery can be held to account not only in Hungary, but the pace of disbursement on the Commission’s side too.

3.2 Handling the tax-reform condition: first impact assessment, then introduction

MIAK takes no position on whether the government should abolish the special taxes — but it proposes that every contested tax element (both the sustainability tax reform and the question of the special taxes) be put on the table with a public impact assessment under the G3 tax-reform programme point: who wins, who loses, how big the budgetary impact is. Progressive, banded wealth and capital-income taxation (G8) can be a realistic medium-term tool for meeting the sustainability goal, but — as Piketty warns (see 6.4.2) — only with EU coordination, because in the case of unilateral introduction capital can flow to neighbouring, lower-rate member states. The third way between the “before the deadline at all costs” and the “no reform at all” positions: a fixed, multi-stage reform path driven not by August but by the calculated impact.

3.3 The source of the freed-up room for manoeuvre is the auditing of clientele spending

The government should generate fiscal room for manoeuvre not from austerity but from restructuring expenditure. The G23 public-debt-sustainability framework and the A2 public-procurement transparency programme point together mean: screening out single-bid, overpriced public procurements and closing clientele channels frees up more resources than any spectacular cutback. Setting up the A10 independent corruption-investigation office is not the fulfilment of a Brussels expectation but a matter of self-interest: it is what makes the Hungarian side credible at the negotiating table.

These three proposals are bound together by a single principle: the release of the funds serves the country if we make both the compliance of their use and the impact of the reforms measurable and public — the stake is not the rhetorical gain of the negotiation, but the lasting reinforcement of inclusive institutions.

Part IV — Expected impacts and risks

Dimension Expected impact Risk
Economy Scheduled, compliant drawdown of the funds opens up development room; transparent milestone-tracking reduces the irregularity rate A drawn-out dispute over the reform conditions delays disbursement; the lack of funds further burdens the budget
Society Prior, public calculation of the impact of the pension and tax change increases trust and predictability Misunderstood communication of the tax reform (e.g. a “pension cut” accusation) breeds social resistance
Public administration Clawback and independent oversight strengthen institutional capacity Milestone administration ties up capacity; political pressure mobilises in defence of existing spending

The main consideration is timing. If the government tries to align the entire reform with the August deadline, it breeds ill-considered, hasty decisions; but if it rejects it entirely, the disbursement of the funds slips. The proposal works if, instead of the two extreme positions, it fixes a calculated, staged reform path — and if the Commission too commits to a public, bilateral disbursement schedule. The proposal tips to the risk side if the structural reform is treated merely as the object of a financial bargain, not as an independent policy goal.

Part V — Measurability and summary

5.1 What is worth tracking? (suggested KPIs)

The following performance indicators (KPIs — Key Performance Indicators) will show in 6-12 months whether the direction is good:

  • the share of fulfilled super-milestones in the public schedule (target: progress according to the committed pace);
  • the share of single-bid procedures in the public procurements linked to EU funds (suggested target: from 30% to below 15%);
  • the share of cohesion projects with a public, machine-readable data sheet (suggested target: 100% by 2027);
  • improvement in the World Bank’s control-of-corruption indicator from the current negative value (2024: -0.17).

5.2 Summary

MIAK’s message to decision-makers and the public alike: let us take the matter of the frozen funds out of the victory-defeat frame and treat it as what it is — a question of compliance and timing. The government should ask for and commit to a public, bilateral milestone schedule; it should first calculate the tax reform and only then introduce it; and it should generate the room for manoeuvre from the auditing of clientele spending, not from austerity. In this approach two MIAK foundational values move together: transparency, because itemised, public delivery-tracking makes the use of funds verifiable; and data-drivenness, because the tax and pension decisions are driven not by the negotiating calendar but by the pre-calculated impact. These two are not a Brussels expectation but the condition for protecting Hungarian public money.

Part VI — Justifications and further sources

6.1 Press framing by spectrum

The topic moved the entire domestic press spectrum, with perceptibly different framing. The liberal and public-affairs lane (Telex, 24.hu, HVG) concentrated on the substance of the dispute: pension and tax reform as a condition, and the reasons for the government’s resistance (weak budget, tight deadline) were at the centre. The economic press (Portfolio) highlighted the negotiating dynamic — the “trench warfare” and “collision course” metaphors emphasise the difficulty of compromise, while it also published Dombrovskis’s “full support” quote. 444.hu and the left-wing Népszava emphasised the social stake of releasing the funds. The pro-government and conservative lane (Magyar Nemzet, Mandiner) was tuned to a reckoning: Magyar Nemzet’s “may leave empty-handed” forecast and Mandiner’s Euronews pickup (“Péter Magyar resists”) framed the government’s weakness. From the spectrum as a whole it emerges that there is no dispute over the facts (reform is the main condition), but the framing emphasises, depending on the political camp, either the government’s difficult inheritance or the government’s weakness.

6.2 Facts and data

Data Value Source
Super-milestones to be met 27 Euronews / 24.hu, 22 May 2026
Individual milestones to be met 368+ Euronews / 24.hu, 22 May 2026
Hungary control of corruption (WGI) -0.17 World Bank WGI 2024
Hungary rule of law (WGI) +0.35 World Bank WGI 2024
Irregularity rate of cohesion funds (EU target) below 0.5% OECD EU Survey 2025 (programme-point reference)

These data underpin the proposal of Part III: the Hungarian control-of-corruption indicator is weak in EU comparison, which is why meeting the conditionality is at once an external expectation and an internal interest.

6.3 Policy aspects

  • Economy (programme points and background material) — the fiscal room for manoeuvre in using the funds, the impact of the tax reform and the public-debt path;
  • Transparency and anti-corruption policy (programme points) — cohesion accountability, public-procurement transparency and independent corruption investigation;
  • Foreign policy (programme points) — the negotiation with EU institutions and issue-based coalition-building.

6.4 Literature in detail

6.4.1 Acemoglu and Robinson: Why Nations Fail

Acemoglu and Robinson argue that lasting prosperity depends not on leaders’ intentions but on institutional constraints: inclusive institutions guarantee that power is limited and shared, so that property rights and predictable rules remain protected. Analysing American development, the authors write that entrepreneurs “trusted the institutions and the rule of law they created, and did not have to worry about the security of their property rights”, because “political power was on the one hand sufficiently limited and on the other hand sufficiently widely distributed for an economic institutional system to emerge that created the incentives necessary for prosperity”. In the case of EU conditionality this means: the anti-corruption and transparency conditions are not external constraints but reinforce precisely the inclusive institutional framework without which the funds, too, bring no lasting growth.

📖 Source: Daron Acemoglu – James A. Robinson: Why Nations Fail

6.4.2 Thomas Piketty: Capital in the Twenty-First Century

Examining the long-term dynamics of capital incomes and wealth, Piketty argues that rising inequality can be moderated by a progressive tax levied on capital — but he warns of the limit: “One can imagine institutions and public policies capable of halting the effects of this inexorable logic — such as a global progressive tax on capital. But such measures presuppose powerful coordination at the international level.” In the case of the Hungarian tax-reform dispute the lesson is direct: the sustainability tax reform and the progressive capital tax work if they fit into an EU framework — which is exactly why the condition is not worth rejecting as a mere national-sovereignty question, nor treating it as a deadline-driven, unilateral introduction.

📖 Source: Thomas Piketty: Capital in the Twenty-First Century

6.5 International comparison

Estonia is the EU frontrunner in the compliant use of cohesion funds: its irregularity rate is below 0.5%, thanks to digital record-keeping and strong internal audit. In the 2014-2020 cycle Poland cut the share of suspicious procedures by 15% by introducing a public-procurement “red flag” system. Both examples show that the solution is not fewer funds or looser conditions, but better control — exactly what the proposal of Part III also targets.

Transparency and anti-corruption policy

  • A8 — Cohesion-policy accountability
  • A2 — Public-procurement transparency
  • A10 — Independent Corruption Investigation Office (CPIB model)
  • A1 — Public-money dashboard

Economy

  • G3 — Tax-system simplification and progressive reform
  • G8 — Progressive capital-income taxation
  • G23 — Public-debt-sustainability framework

Foreign policy

  • KP17 — Issue-based coalition-building in the EU
  • KP3 — Transparent foreign policy

6.7 Source register

Press sources (MIAK press monitor, 23 May 2026 — topic 1):

Knowledge-base references (literature):

  • 📖 Daron Acemoglu – James A. Robinson: Why Nations Fail
  • 📖 Thomas Piketty: Capital in the Twenty-First Century

Note: the local file path of the books does not appear in the visible text of the blog — only the author and the title. The file path is an internal matter of the generation process.

MIAK internal materials:

  • MIAK policy area: Economy (programme points; programme point ID: G3)
  • MIAK policy area: Transparency and anti-corruption policy (programme points; programme point ID: A8)
  • MIAK policy area: Foreign policy (programme points)
  • MIAK press monitor, 23 May 2026 — topic 1, score: 90/100

Additional public data sources:

  • World Bank Worldwide Governance Indicators (WGI) 2024 — control-of-corruption and rule-of-law indicators
  • OECD EU 2025 Survey — effectiveness of cohesion policy

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