Norway ends boycott of funds to Hungary

OSLO (Reuters) - Norway said on Thursday it had lifted its suspension of development funds to EU member Hungary, ending a 19-month diplomatic standoff over how to control the money.

Announcing the resumption of payments, Norway’s European Affairs Minister Vidar Helgesen told parliament that Hungary has promised not to interfere in the distribution of funds and that accusations of tax evasion had been dropped.

“Hungarian authorities have now promised to stick to the signed agreements,” Helgesen told Reuters. “There is a message in this for the EU, in that it shows that it’s possible to handle these cases in a principled way.”

European Union outsider Norway pays hundreds of millions of euros per year to countries in central and southern Europe to boost their economies and support democracy, the environment and human rights. In return it wins access to EU-wide markets.

But last year it froze most of 153.3 million euros in planned payments to Budapest, accusing the government of trying to influence the spending in violation of agreements and of conducting an undemocratic clampdown on civil organizations.

Budapest had earlier launched a legal investigation against organizers and beneficiaries of the Norway Grants, saying the Scandinavian nation was helping advance the political goals of an opposition group.

The crisis deepened in September 2014 when Hungarian police raided the offices of an NGO that distributes Norwegian funds.

On Thursday, Hungarian Prime Minister Viktor Orban’s chief of staff Janos Lazar said the two countries had reached a “constructive agreement” about past payments that would allow Hungary to draw on the funds, although disagreements remained.

“About 2014-2020 we have disputes about who should distribute the funds. We insist that the government should make the decisions,” he told a news conference.

The current Norway-EU funding period was originally scheduled to end in 2014 and be replaced by a new round from then. Lengthy negotiations on the overall size of the funds were only recently concluded, however, and country-by-country talks on how to distribute funds must now take place.

Reporting by Terje Solsvik; Additional reporting by Krisztina Than in Budapest; Editing by Catherine Evans