Do EU Transfer Payments Fuel Corruption?

W ith Prime Minister Viktor Orbán’s Fidesz party defeated in Hungary’s recent election, will corruption be cleaned up and respect for the rule of law improved? The incoming prime minister, Péter Magyar, wants to establish a new institution to investigate government graft. That’s fair enough, but a caveat is warranted. Many of the allegations of corruption under Orbán are linked to European Union funds. Famously, vast amounts due to be sent Hungary’s way have been frozen over governance concerns under Orbán. Will the housecleaning intended to secure their release be enough to ensure that the arrival of this new cash does not refuel the process that Magyar has undertaken to end? After all, it’s not just in Hungary that EU funds have been linked to corruption.

Between 2011 and 2014, and in 2020, the net amounts Hungary received from the European Structural Funds exceeded the country’s total nominal GDP growth. The decision to freeze was bound to hurt. To be fair, Orbán’s policies were also hitting growth. NR’s John Fund described how “voters punished Orban in Hungary for his mismanagement of the economy. Last 3 [years’] growth was 0.1%. On the economic issues voters cared about Orban was NO conservative — he seized over 300 companies, pursued crazy EV battery industrial policy, handed out goodies and saw inflation go up 57% in 6 years.”

It is reasonable for the EU to cut off funding in cases of suspected corruption, but that sanction should be applied even-handedly. These issues are not confined to Hungary. In his 2016 book “Post-Communist Mafia State: The Case of Hungary,” and later works he wrote together with Bálint Madlovics — such as “The Anatomy of Post-Communist Regimes” — Bálint Magyar describes how a “mafia state” is not a system in which organized crime infiltrates the state, but rather a state where the ruling elite employs mafia methods to centralize wealth and power.

Poland and Romania, in particular, are critically examined by both authors for this reason. Madlovics refers to Romania as a “patronal democracy,” in which multiple patronal networks vie for power, rather than a single network, such as Orbán’s.

Unlike Hungary, however, the other EU member states never took similar measures against Romania, despite the abundant evidence of corruption involving EU funds in the country. Bulgaria, too, consistently managed to avoid scrutiny, even when large-scale protests were organized by the population against corruption, which brought down the government in late 2025. Was this because the ruling parties in both member states are part of the Christian Democratic European People’s Party or the European Socialist faction, the two most important pillars of the EU’s political establishment?

On the other hand, the Polish right-populist PiS party is not a member of those political families, and there were indeed years of tension with Brussels during its time in government. The criticism from Brussels was not necessarily unjustified, but are PiS’s Brussels-friendly successors any better?

Judging by an article by Matthew Boyse of conservative think tank the Hudson Institute, that question is, to say the least, less than clear. In 2025, Boyse argued that there were indeed “valid questions” to be asked about the PiS administration, but that this is equally true of Prime Minister Donald Tusk’s new government, which took office in 2023: “Since taking office, the Civic Platform government has been taking dubious, if not illegal, steps under the guise of ‘restoring democracy,’ many of which bear close resemblance to those of which it accused the previous government of doing.”

The American Courthouse News Service described many of Tusk’s reforms, including the purges within state media, as “constitutionally dubious.” The Polish Constitutional Court also overturned several of these measures. Tusk’s supporters point out that most judges at that institution were appointed by the previous PiS government, but in many democracies — including the U.S. — judicial appointments are often influenced by political considerations.

The European Commission has not criticized the Tusk government. On the contrary, it terminated its Article 7 proceedings, which it uses against members who potentially violate the rule of law, and which had been underway under the previous government. A European Commission spokesperson did, however, acknowledge the “difficulties that might arise in the course of the legislative process. We can also not expect Poland to solve the remaining issues overnight.”

Perhaps it is worth adding that both PiS and the Fidesz government led by Orbán accepted their election defeats despite having been regularly labeled “autocratic” by their opponents for years.

But questions about selective enforcement should not obscure the grim reality that EU funds are linked to corruption in both Eastern and Western Europe. An analysis by Hungarian researchers István János Tóth and Miklós Hajdu of approximately 5 million public contracts from EU member states between 2007 and 2023 “shows that EU-funded contracts are associated with a significantly higher corruption risk than those financed by national sources.” Even for Western European countries, there was, in fact, “a strong positive correlation between EU subsidies and corruption risk.”

In 2021, Vincenzo Musacchio, an Italian professor of criminal law who is affiliated with the Rutgers Institute on Anti-Corruption Studies, observed that “between 2015 and 2020, the EU has allocated around €70 billion to Italy in structural & investment funds. Half of these funds ended up in the hands of organised crime.” The problem of corruption in the European Union and its member states should not be considered in isolation from the billions in European aid funds.

Magyar is attempting to tackle corruption by creating an anti-corruption authority and an authority for the recovery of assets — tasked with reclaiming state funds and contracts improperly awarded to Orbán loyalists. Over the long term, something deeper is required, such as what former Georgian President Mikheil Saakashvili achieved in his country 20 years ago (at least for a while) by simply reducing the government’s role in the economy.

There’s a lesson there: If the EU is concerned about corruption in Hungary or other member states, it already has the power to address it. It could simply make substantial cuts to EU transfers.