BRUSSELS ― The European Commission has partly rejected a Hungarian plan to unblock €545 million in frozen EU funds as tensions escalate again between Brussels and Budapest.

Of that amount, Hungary will only receive €163.5 million in advance payments ― and even that can be clawed back by the Commission if they are deemed to be misspent.

National capitals are increasingly frustrated with Hungarian right-wing Prime Minister Viktor Orbán over his threats to torpedo tougher sanctions on Russian energy and block Ukraine’s EU membership bid and a €140 billion EU loan to the war-torn country.

These issues are taking center stage at an informal summit in Copenhagen on Wednesday, where leaders are discussing moving from unanimity to qualified majority voting precisely to overcome Orbán’s veto.

Against this backdrop, the Commission is holding firm against releasing a significant part of the €18 billion in EU funds it has withheld from Hungary over breaches of academic freedoms and minority rights, among other deficiencies.

As a workaround, the Hungarian government proposed moving €545 million from university schemes to “strategic” industrial projects, but the plan was not fully embraced by Brussels.

“We are not disbursing any funding before the horizontal enabling conditions are fulfilled and for now they are not fulfilled,” said Commission spokesperson Maciej Berestecki, referring to the broad conditions that member countries must meet in order to receive EU funds.

Strategic projects

Nevertheless, the EU executive decided last Thursday to release €163.5 million out of the €545 million as advance payments.

In this instance the Commission was bound by its own rules, which compel it to put forward 30 percent of total funding for strategic projects including critical infrastructure and biotechnology.

Releasing the entire amount would likely have triggered a backlash from the European Parliament and EU capitals ― especially those in Northern Europe, which are the most annoyed at Orbán’s antics.

Given Hungary’s repeated threats to use its national veto to block some of the EU’s biggest initiatives, keeping most of the funds frozen gives Brussels more leverage to secure concessions on strategic files, said a Commission official with knowledge of the process who was granted anonymity to speak freely.

The Commission’s official reason for keeping most of the €545 million blocked is that it fears Hungary could still siphon that cash toward universities.

The Commission has repeatedly urged Budapest to restore academic freedoms in order to unblock the money stream.

“The Commission considered that the horizontal enabling conditions can be fulfilled only if the universities run by so-called public interest trusts are clearly excluded from these new priorities, or the issues raised by the Commission in the past concerning the public interest trusts are resolved,” Berestecki wrote in a statement.

Hungary’s request predates a midterm revamp of regional funding that makes it easier to reshuffle funding across different policy areas.

Critics claim that Budapest will use this loophole to try to unblock other funding in the future.