The Orbán Government and EEA and Norway Grants

EEA and Norway Grants 

promo-bannerThe EEA (European Economic Area) and Norway Grants are financial support that non-European Union member states Norway, Iceland and Liechtenstein provide to less developed EU countries in exchange for access to the Internal Market providing for the free movement of goods, services, capital and people within the union. The EEA and Norway Grants represent two distinct types of funding under one rubric: the EEA Grants funded by Norway, Iceland and Liechtenstein and the Norway Grants funded by Norway only.

EEA Grants

EEA Grants provided 993.5 million euros in funding to the 13 newest members of the European Union as well as Spain, Portugal and Greece during the 2009–2014 budgetary period. Norway provided 94 percent of this funding, while Iceland provided 5 percent and Liechtenstein the remaining 1 percent. Hungary received 70.1 million euros in EEA Grant support during the 2009–2014 budgetary period, the fourth-highest total behind Poland, Romania and Bulgaria (source in English). 

EEA Grants are awarded to finance activities in the following areas: environmental protection; renewable energy; human and social development; protecting cultural heritage; and civil society (non-governmental organizations). 

The Brussels-based Financial Mechanism Office (FMO) composed of officials delegated from the foreign ministries of Norway, Iceland and Liechtenstein is responsible for the administration of the EEA Grants. 

The Financial Mechanism Office supports NGOs in Hungary through the Norwegian Civil Support Fund. The FMO manages the Norwegian Civil Support Fund through its local partner, the Hungarian Environmental Partnership Foundation, known as Ökotárs in Hungarian (source in English). 

The Financial Mechanism Office has provided 13.5 million euros in EEA Grant support to around 150 NGOs in Hungary for the 2012–2017 budgetary period (source in English).

Norway Grants

Norway Grants provided 804 million euros in funding to the 13 newest members of the European Union (though not Spain, Portugal and Greece) during the 2009–2014 budgetary period. Norway provides 100 percent of this funding. Hungary received 83.2 million euros in Norway Grant support during the 2009–2014 budgetary period, the third-highest total behind Poland and Romania (source in English).   

Norway Grants are awarded to finance activities in the following areas: reduction of carbon emissions, green-industry innovation, unemployment and gender discrimination in employment, human and social development and combating domestic violence.

Norway’s foreign ministry is responsible for administration of the Norway Grants. 

The 153.2 million euros in EEA and Norway Grant support that Hungary received for the 2009–2014 budgetary period amounts to approximately one percent of the three to four billion forints in net funding that the country receives each year from the European Union.

Orbán Government Accusations of Political Interference 

Prime Minister's Office chief János Lázár.

Prime Ministry chief János Lázár.

On April 8, 2014, the pro-government newspaper Magyar Nemzet reported that János Lázár, the minister who heads the Prime Ministry of Hungary, had written a letter to “the Norwegian cabinet member responsible for development” in which he charged that the government of Norway was channeling EEA Grant support to Hungarian NGOs close to the small green-liberal opposition party Politics Can Be Different (LMP) through the Ökotárs organization that conducts the management of such funding in Hungary. According to Magyar Nemzet, Lázár said that EEA Grant support to these LMP-affiliated NGOs represented “interference in domestic politics” (source in Hungarian).   

The LMP denied maintaining any formal connection to Ökotárs (source in Hungarian).  

On April 30, Prime Ministry Deputy State Secretary Nándor Csepreghy stated that the government of Hungary should manage EEA Grant funding to NGOs in the country rather than Ökotárs and affiliated organizations, which Csepreghy referred to as a “fraudulent, party-connected putty clubs” [párthoz kötődő, szélhámos gittegyletek] (source in Hungarian).  

On May 30, 2014 the Orbán government published a list of 13 EEA Grant-supported NGOs in Hungary that it considers to be closely connected to Politics Can Be Different (source in Hungarian). These NGOs most prominently include organizations that monitor the use of state funding (the Transparency International Hungarian Foundation, K Monitor and the Asimov Foundation, which runs the website atlatszo.hu); civil-rights organizations (the Hungarian Civil Liberties Union); and gay-rights organizations (the Labrisz Lesbian Association and Rainbow Mission Hungary, organizer of the annual Budapest Pride LGBT festival and parade). These organizations have been very critical of the Orbán administration for its alleged opaque use of public funding in order to build a pro-Fidesz oligarchy, disregard for civil liberties and indifference toward gay rights.

Suspension of EEA and Norway Grant Funding to Hungary 

Minister in charge of EEA Affairs and EU Relations at the Office of the Prime Minister of Norway Vidar Helgesen.

Minister in charge of EEA Affairs and EU Relations at the Office of the Prime Minister of Norway Vidar Helgesen.

On May 9, 2014, Minister in charge of EEA Affairs and EU Relations at the Office of the Prime Minister of Norway Vidar Helgesen announced that Norway, Iceland and Liechtenstein had decided to suspend EEA Grant and Norway Grant funding to Hungary because the Orbán administration had transferred implementation and monitoring of the grants from the central government to an independent, state-owned company called the Széchenyi Programiroda Nonprofit in violation of the agreement the countries had concluded regarding the grants. Helgesen noted that the suspension would not affect Financial Mechanism Office-managed EEA Grant funding for NGOs in Hungary (source A in English and B in Hungarian). 

Orbán Government Audit of EEA Grant Funding to NGOs in Hungary  

On May 21, 2014, the Prime Ministry instructed the Government Control Office (Kormányzati Ellenőrzési Hivatal)—the state organization that conducts oversight of public funding in Hungary—to launch an investigation of the use of EEA Grant support for non-government organizations in Hungary (source in Hungarian; see Invasion of the HomoVikings). 

On May 29, Prime Ministry Deputy State Secretary Csepreghy said that “The Hungarian government not only has the right, but the duty to examine if everything took place in the most proper way surrounding the use of money arriving to our homeland from the Norway Fund over the past years” (source in Hungarian). 

On June 2, 2014, officials from the Government Control Office (KEHI) visited the offices of Ökotárs in order to obtain documents regarding the organization’s operations (source in Hungarian). Several EEA Grant-supported NGOs received requests from KEHI for similar documentation in the middle of June, though indicated that they would not cooperate with the government financial-oversight office.  

Nándor Csepreghy

PM Deputy State Secretary Nándor Csepreghy.

On June 6, Minister in charge of EEA Affairs and EU Relations Minister Helgesen strenuously protested KEHI’s audit of Ökotárs in a communiqué published on the official website of the Foreign Ministry of Norway. Helgesen asserted in the communiqué that the KEHI audit violated the stipulation of the agreement that Hungary signed in order to obtain EEA Grant support stating that Norway, Iceland and Liechtenstein are solely responsible for the financial oversight of the funding (source in English).  

On July 9, 2014, Council of Europe (not the same as the European Union) Commissioner for Human Rights Nils Muižnieks wrote a letter Prime Ministry director Lázár expressing concern about the KEHI audit of EEA Grant support for non-government organizations in Hungary and the “stigmatizing rhetoric” the government had used in connection with these NGOs (source in Hungarian). 

In a July 21 response to this letter, Lázár claimed that the EEA Grant support to NGOs constituted “public money” and that it is therefore the “moral obligation of the Hungarian Government of Hungary” to investigate use of the funding (source in English). 

On September 13, 2014, Lázár reiterated his opinion during an interview with the opposition website index.hu that EEA and Norway Grant support constitutes Hungarian public funding: “It is paid out through the Hungarian budget, therefore it is considered to be public money according to the Budget Law. KEHI has the right and possibility to examine that which falls under the authority of the Budget Law” (source in Hungarian). 

KEHI published its audit of EEA Grant funding to NGOs in Hungary on October 22, 2014 (source in Hungarian). The audit arrived to the following conclusions: Ökotárs and three affiliated organizations had awarded EEA Grant funding to NGOs that fell within its “sphere of interest” and were “clearly affiliated to a political party or were clearly propagating a certain world view”; Ökotárs had “regularly provided loans” to NGOs that had received funding and had charged these organizations interest on these loans; and budgetary fraud, including backdating for late projects, unapproved funding increases and funding for irrelevant expenses, had occurred in connection to 61 of 63 examined NGO programs (see English-language version of audit).

In a communiqué issued on the same date, KEHI announced that it had initiated the criminal investigation of 13 cases of budgetary fraud of two types (költségvetési csalás and hűtlen kezelés) based on the audit. The communiqué stated that “an unambiguous connection was demonstrable between the benificiary and the directors or employees of one of the involved organizations or outside individuals participating in the appraisal of tenders” in the case of 21 of 55 NGOs investigated as part of the audit (source in Hungarian).

Reciprocal Diplomatic Summons 

On June 10, 2014 Minister of External Economy and Foreign Affairs Tibor Navracsics of Hungary summoned the ambassador of Norway to his office to discuss the conflict between the governments of the two countries over EEA and Norway Grant funding. This démarche represented diplomatic reciprocation of a June 4 summons from the Foreign Ministry of Norway to Hungary’s ambassador for the same purpose (source in Hungarian).    

EEA Grant Funding for Civil Demonstration

On June 19, 2014, Managing Director Márton Gulyás of EEA Grant-supported Hungarian NGO Krétakör admitted that the organization had used EEA Grant funding to help finance a civil demonstration held to protest the government’s alleged pressure on the website origo.hu to fire a journalist who had published an article revealing that Prime Ministry director Lázár had accumulated two million forints (6,600 euros) in hotel bills during three secret trips to Switzerland in 2012 and 2013 (source in Hungarian; see A Few Thousand Malcontents). 

Investigation of EEA Grant NGO Funding on Suspicion of Embezzlement 

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Rapid Deployment Police officers escort Ökotárs Director Veronika Móra out of the foundation’s headquarters in Budapest on September 8, 2014.

On June 27, 2014, Prime Ministry Deputy State Secretary Csepreghy suggested that the government of Hungary could initiate charges of embezzlement in connection with EEA Grant support for NGOs in the country (source in Hungarian). On August 28, the Budapest Police confirmed that the National Investigative Office [Nemzeti Nyomozó Iroda], the Hungarian equivalent of the FBI, had launched an investigation of Ökotárs-coordinated EEA Grant funding for non-government organization’s operating in Hungary (source in Hungarian).

On September 3, KEHI announced that the organization had filed a criminal complaint with the National Police Department against an unspecified perpetrator on suspicion of unlawful use of EEA and Norway Grant funding. KEHI told the Hungarian News Agency MTI that an investigation had revealed that the unnamed organization had used such funding to provide illicit monetary loans to several dozen associations and foundations over a period of five years (source in Hungarian).

On September 8, 2014, investigators from the National Investigative Office and a large number of officers from Hungary’s Rapid Deployment Police [Készenléti Rendőrség] conducted raids on the headquarters of the Ökotárs Foundation and five other locations in Budapest to collect evidence pursuant to the charges of unlawful use of EEA and Norway Grant funding that KEHI had filed the previous week (source A and B in Hungarian).

EEA Affairs and EU Relations Minister Helgesen Helgesen of Norway issued a statement in which he said “The police raid on 8 September is completely unacceptable. It shows that the Hungarian Government intends to stop the activities of NGOs that are critical to the authorities. It also shows that the Hungarian Government is failing to respect common European values relating to democracy and good governance” (source in English). 

Orbán Accuses Hungary’s Civil Sphere of Serving Foreign Interests  

During a speech on July 26, 2014, Prime Minister Orbán said the following about civil society in Hungary (see Proclamation of the Illiberal Hungarian State): 

In Hungary the civil world is showing a very unique face. Those operating in the civil sphere—contrary to the professional political official—are individuals, are a community that is organized from below, stands on its own financial feet and is naturally voluntary. Now in contrast to this, if I take a look at Hungary’s civil sphere, that which plays a regular role in public affairs—the controversy surrounding the Norway Fund has brought this to the surface—then I see that we are dealing with paid political activists. Activists paid by identifiable foreign spheres of interest . . . And these paid political activists are, moreover, political activists paid by foreigners. Political activists paid by identifiable foreign spheres of interest about which it is difficult to imagine that they regard this as a social investment, rather the notion is much more justified that through this system of means they wish to exercise influence over Hungarian state life at a given moment and with regard to given issues. Therefore it is very important if we want to organize our national state in place of the liberal state to make it clear that here we are not standing opposite people from the civil sphere, it is not people from the civil sphere coming at us, but paid political activists who are trying to assert foreign interests in Hungary. This is why it is very correct that a committee was established in the Hungarian parliament that is engaged in the continual monitoring, recording and publicizing of foreign influence gathering so that everybody, you as well, can know precisely who the true characters are behind the masks.

Norway’s EEA Affairs Minister Criticizes Hungary in Editorial 

In an editorial published in the Financial Times on August 28, 2014, EEA Affairs and EU Relations Minister Helgesen Helgesen of Norway asserted that the “Hungarian government has launched a crackdown on civil society.” Helgesen, who also serves as Norwegian Prime Minister Erna Solberg’s chief of staff, stated in the editorial that “Hungary’s government is turning its back on the west” and that “Hungary’s journey towards becoming an illiberal state is already well under way.” Helgesen concluded that “the EU should demonstrate in no uncertain terms that it will not accept the re-establishment of an illiberal state within its borders” (source in English). 

 

Last updated: November 6, 2014.

 

 

 

 

 

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